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Are All of Your Assets Accounted for on Your Balance Sheet?
Posted: 9/17/2018

Your business buys a new truck. Cash comes out of your Cash-on-Hand and the value of the truck is added to your Equipment category. An invoice is paid, reducing your Accounts Receivables and increasing your Cash-on-Hand. And so it goes as your accounting system automatically and accurately accounts for your company’s assets.

There is, however, one important class of asset that often falls through the cracks. One of your employees – in R&D or Engineering or Manufacturing or Marketing or any other department in the company – comes up with an idea for a new product. You decide to file for a patent to protect your invention. Good idea. You engage a patent attorney who files the patent application and manages the prosecution of the patent application.

The employee or employees who made the invention receive their salaries, and they are accounted for by your accounting system. The patent attorney bills out his or her services and is paid. And that expense is accounted for by your accounting system. So far, everything is working fine.

About two years after you file the patent application – current patent pendency at the U.S. Patent and Trademark Office is about 25 months – your application is approved and a patent is granted. And the handsome hard copy U.S. Patent with the red ribbon on it arrives at your business. Some businesses frame them and hang them on the wall. Other businesses just put them in a file folder. Some businesses have an IP page at their website, so they add the patent to the company’s list of patents at the website. And this is all fine.

But what virtually NO company does is perform an accounting transaction. Despite the fact that your company has a new asset – one that could be of considerable value – no change occurs to your company’s Balance Sheet because no other accounting transaction – like issuing an invoice or cutting a check – has occurred.

When a company buys a patent, the purchase is an accounting transaction, so the acquired patent or patents appear on the Balance Sheet under Intangible Assets. But the home-grown patents – patents the company applied for and received – do not trigger an accounting action that makes the patent an asset on the company’s Balance Sheet.

For a public company, home-grown patents are assets that do not appear on the Balance Sheet, so they are not, therefore, included in the computation of the value of the business and not reflected in the company’s stock price. For a private business, home-grown patents are assets that do not appear on the Balance Sheet, so they are not, therefore, assets that can be used to secure loans, limiting the ability of the business to generate the working capital it needs.

Every business with a significant patent portfolio should have a professional valuation done every few years or so to determine the fair market value of those intellectual assets. Once the value of those assets has been determined through a third-party valuation, there is a process (consult with your CPA or auding firm) for adding those assets to your Balance Sheet. Only then will your business’s Balance Sheet – be it a public or private company – truly reflect all of the assets of the business enterprise.

In addition to patents, make sure that your Balance Sheet also includes the fair market value of your company's trademarks, service marks and copyrights, and any proprietary technology and know-how your company owns and uses.

Fortunately, securing a professional valuation of your company's patent(s) is right at your fingertips. IPOfferings provides three separate Patent Valuation Services.
► Basic Patent Valuation: This service covers six key metrics and is for internal pricing consideration.
► Enhanced Patent Valaution: This service would be used to value unrecorded patents and covers 12 key metrics.
► Comprehensive Patent Valuation: This service is used to value a patent family (a U.S. Patent that has associated foreign patents or applications) or a portfolio, it covers 18 key metrics, and it includes recommendations for increasing the value of the IP.

Just click here to visit the Patent Valuation Services page at our website. At that page, you can download the Data Sheet on our Patent Valuation Services.

Seat Belts and Air Bars Have Actually Been Around for a While
Posted: 8/19/2018

Those of us with a few years behind us think of seat belts and air bags as fairly recent auto safety developments, and they are, but the concepts for both go back quite a ways.

Vernon Carlisle received U.S. Patent No. 2,365,626 in 1944 for a “Safety Holding Device for Automobiles.” It appears to be the first U.S. Patent for what we today call a “seat belt.” It was a double-strap cross-over seat belt like flight attendants use. What we find interesting is that in 1944 the entire U.S. automobile industry had been turned over to war production. The Chevrolet plant in Detroit was cranking out fighter planes 24/7. You could not buy a new car, but Mr. Carlisle was obviously thinking of the future. He filed for the patent in 1941 (just a week after the attack on Pearl Harbor), so patent pendency was about three years at that time.

The Nash Ambassador and Statesman models introduced seat belts to the American public way back in 1950. As one of the smaller car companies – Nash merged with Hudson to form American Motors – the company was looking for a competitive edge to set it apart. The only American Motors nameplate that survives today is the Jeep.

Seat belts became mandatory in 1968, and in 1974 the federal government upped the ante. You could not start the car until you latched your belt! There was so much resistance from the public that today we just have an annoying buzzer when we don’t buckle up.

We find no record of Mr. Carlisle ever commercializing his patent. That is not to say that he did not, we just do not find any press or other coverage indicating that he did.

The second significant advancement in auto safety, air bags, goes back to 1958 when Harry Bertrand received U.S. Patent No. 2,834,606 for a “Safety Device for Passengers.” He filed for the patent in 1955, so the Patent Office was still running about a three-year pendency for patent applications. It was the forerunner of the modern air bag of today. The patent has 217 Forward Citations.

Air bags caught on slowly. Ford experimented with air bags in some vehicles beginning in 1971. The 1973 Oldsmobile Toronado offered both driver side and passenger side air bags. As one of the first front-wheel-drive vehicles, the Toronado was GM’s test vehicle for new technologies.

GM featured airbags on its full-size 1975 Buicks and Oldsmobiles, and added air bags to the Cadillac line in 1976. During the Lee Iacocca years at Chrysler, the company was looking for a competitive edge – just as Nash was 40 years earlier – so it introduced airbags as standard equipment on all its 1988 models! It was not until 1998 that air bags were made mandatory.

And we also find no evidence – he may have, and we hope he did – that Mr. Carlisle every licensed his air bag patent.

There's the Light Bulb Patent, Telephone Patent and Airplane Patent. Did You Know There Was an Automobile Patent?
Posted: 7/22/2018

Yes, Virginia, there actually is an automobile patent – actually the automobile patent. George B. Selden of Clarkson, New York (near Rochester) was granted U.S. Patent No. 549,160 for a “Road Engine” on November 5, 1895.

Inspired by the gasoline engine invented by George Brayton and introduced at the Centennial Exposition in Philadelphia in 1876, Selden went to work on an improved engine with an enclosed crankshaft that powered a four-wheel vehicle. He filed for the patent in 1879, but he then filed a series of amendments to his application, stretching out the process so it took 16 years to get his patent. Talk about patent pendency! In a strange twist of fate – you know we love them – George Selden’s witness when he filed his patent application was none other than George Eastman of Kodak Eastman fame. Small world.

Selden’s patent covered an internal combustion gasoline engine that powered a four-wheel vehicle. Pretty broad coverage. He began assembling automobiles in Rochester at his Selden Motor Vehicle Company. He worked out a deal with the Association of Licensed Automobile Manufacturers to pay him a 0.75% royalty on all cars sold by the association’s members.

All went well until one Henry Ford came along. What most people do not know is that Ford was actually late getting into the automobile business. By the time he introduced his Model T (he had worked his way through Models A through S) in 1908 there were at least 50 companies assembling automobiles and paying a royalty to the association. Almost all are now out of business, but Buick and Cadillac are two that survived.

Ford was not about to pay anyone a royalty! It would not have broken him or significantly raised the price of his cars, but the man who said you could have “any color you want as long as it’s black” just did not want to pay the royalty or even recognize the legitimacy of the Selden Patent!

Selden sued Ford and four other car makers for infringement of his patent. It was the news story of the day, just as the Apple-Samsung smartphone patent lawsuit was 100 years later, and it generated thousands of pages of documentation at a time when there were no copiers! Ford lost in the first round, but he appealed the decision and got the patent invalidated – a strategy still in use 100 years later – with his claim that Selden’s patent was not actually based on the Brayton engine but on an engine invented by Nicolaus Otto.

Ford went to become a multi-millionaire. Selden had collected a few hundred thousand in royalties, and he did manufacturer and sell a few cars – and later trucks – but he was a broken man after his patent was invalidated.

So What Exactly Is a Blockchain?
Posted: 6/24/2018

IPOfferings represents several blockchain-related patents. They are listed in the Digital Currency section of our Patent Marketplace and we just completed the sale of a blockchain patent. However, blockchains are not just networks for tracking digital currency transactions. They come in thousands of different configurations and each functions differently from one another.

Blockchains can be public or private in terms of who gets to view the data. Because all transactions on a public blockchain are visible, anyone can view them and this enables the community of users of a given blockchain the opportunity to hold all users accountable. It also removes the need for a third party to authenticate transactions or store sensitive information. It also provides users with greater autonomy to read, write and publicly participate within the blockchain.

A blockchain creates a decentralized database in which information is stored on many different computers. Structuring a blockchain database limits risk, increases data protection, and promotes the distribution of data. No one can delete information – accidentally or intentionally – since it is backed up at various locations. The cryptographic security a blockchain can provide is unmatched. The most common blockchain secure hash algorithm in use today is called SHA-256.

Another key feature of a blockchain is the immutability principle. Data within the blockchain is trustworthy because it cannot be changed. In a blockchain, hashing is used to integrate new incoming information into the current state of the blockchain. Each new block of information that is added is hashed and tied to the previous block. This creates a transparent, traceable chain and ensures that all entries to the chain are legitimate. In order for a block to be added to the chain, a recorded transaction must first be verified by all the systems that are “mining” on the blockchain.

First Generation Blockchain: Launched in 2009, Bitcoin was the first widely used blockchain network and it set the stage for future blockchains and robust shared public ledgers. Transactions over this network are slow, taking about 10-15 minutes to complete. Although it is still the most famous blockchain network, it is well on its way to obsolescence.

Second Generation Blockchain: The next generation of blockchains were able to function as digital ecosystems or platforms off which other applications can run. This greatly increased the range of functionality the blockchain could offer users. Second-generation blockchains use "smart contracts" - a set of instructions or logic that can be triggered by an event. These smart contracts led to ICOs (Initial Coin Offerings) that are used to raise money for a project or business. This marked a radical shift for the entire blockchain space opening a new pipeline for entrepreneurship and reshaping the venture capital marketplace. The velocity of investment in the space is faster than almost any other money-raising vehicle. For example the Bancor Foundation raised $153 million in a three-hour period.

Beyond applications like smart contracts, second-generation blockchains offer greatly increased transactional speeds of around 10-15 seconds per transaction. This - added to the asset liquidity of the blockchain - has made it much more appealing as a store of value for circulation.

Third Generation Blockchain: The Gen 3 blockchain focuses on increased readability and usability. By simplifying code, allowing for account recovery, and offering an overall lighter-weight operation, these blockchains are designed with an eye towards scalability and mainstream adoption.

Proof-of-work, the transaction verification system used on the primitive Bitcoin network, has been widely replaced with delegated-proof-of-stake verification with transaction speed rates up to 10,000 transactions per second. Large amounts of data can be stored and processed on these blockchains. They will be able to interact with each other, connecting different blockchains together, and making the use of blockchains more practical for businesses and individuals alike. This is referred to as “atomic swaps.” Transactions on these blockchains are considered digital legal agreements and they will be the underpinning of future commerce and business.

Blockchain technology has come a long way since the launch of the Bitcoin ten years ago. The blockchain has emerged from an unknown technological novelty into an asset with real value. The blockchain does not solve every problem and is still faces growing pains as any immature technology does. As it continues to develop and expand in both prominence and potential, it will become increasingly important to stay informed and in-the-know about all things blockchain. And about all the new patents that cover the latest blockchain technologies.

Our thanks to Steven Gillen for his contributions to this article. Steven produced a most informative video, a Blockchain Crash Course, that expands on what is covered in this article.

So What Exactly Is Heuristic?
Posted: 5/16/2018

We adore words because patents are – after all – words: Words that precisely describe an invention that is worthy of protection. And when we come across a particularly effective, but rarely used, word, we stop what we are doing and bask in the moment. One such word that we recently came across was “heuristic.”

Heuristic comes from the Greek “heuriskein” that means to find or discover something. A heuristic technique is a approach to problem solving that employs a practical method that is sufficient to reach a goal. A heuristic approach is not optimal, perfect or logical – or even rational – but it gets you where you want to go.

We were introduced to heuristics in one of the most famous patents of this century. You knew we had to tie this into a patent, right? The patent was granted in 2009 and it had 50 named inventors. The lead inventor was Steven P. Jobs. Got it yet? It was what is generally considered to be the iPhone patent, U.S. Patent No. 7,479,949 for a “Touch screen device, method, and graphical user interface for determining commands by applying heuristics.” The idea of applying heuristics – we can only assume as we were not directly involved with the writing of the patent – is that the icons on the screen could be figured out by the user without having to refer to a guide or manual, so that the user would fairly quickly figure out what each one meant and what it did. By touching each icon – that’s the practicality of heuristics – the user would gain an understanding – that’s the sufficient goal – of how to operate his or her iPhone.

The patent includes 20 Claims and hundreds of drawings to supplement all the words. The hard copy patent runs 364 pages! It is most comprehensive as you can see, covering most of the new features that turned cell phones into smartphones.

Talk about a foundational technology? This patent has almost 2,000 Forward Citations.

We Like Our Building(s) Better
Posted: 4/15/2018

The Council on Tall Buildings and Urban Habitat (CTBUH) – no, we are NOT making this up – just named the new headquarters of the European Patent Office “Best Tall Building” for 2019. Just to be clear, it was not THE “Best Tall Building” in the world, it was just the “Best Tall Building” in the 100 to 199 meters category. To quality for this dubious award (as far as we are concerned), a building has to make significant contributions to the advancement of tall buildings and the urban environment, with sustainability as a key focus area. Each project is expected to minimize effects on the natural environment, have a positive influence on inhabitants in the local area, and be of economic vitality to its occupants and the community.

Award or no award, we like our Patent Office building better. Make that buildings. For those of you who have not been there, the U.S. Patent and Trademark Office has a spectacular campus with five buildings in Alexandria, Virginia, just south of DC. On your next trip to the District – business, pleasure or legal – take the drive down the beltway, or take Amtrak or the Metro, and see the place.

The buildings all face a spectacular courtyard, there is lots of glass, the atrium lobby of the Madison Building is very impressive, and – a factor to never be underestimated – there is lots of nearby parking.

Bring the kids, and take them to the National Inventors Hall of Fame and Museum. Tell them IPOfferings sent you, and you will get the special tour.

Is This the Next Ford Mustang?
Posted: 4/15/2018

Yes, we are patent guys, but we are also car guys, so we love car patents. U.S. Patent Application 20190023115 filed by Ford for a “Twin motor drive system for hybrid electric vehicle” was just published, and it just might be the next Ford Mustang – a hybrid all-wheel drive car.

It looks as if the vehicle will have traditional rear-wheel drive powered by its nasty gasoline engine, but it will have electric motors on the front wheels. We assume that the car will be rear-wheel drive when you are using the gas engine, but front-wheel drive when you switch to electric power. And then – and this is the really ingenious part, but, hey, this is a patent, right? – you can kick in BOTH the gas power to the rear wheels AND electric power to the front wheels for all-wheel drive! The challenge, as we see it, is getting those two transmissions to work in sync so all four wheels are turning at the same rpms.

It also looks like Ford is not going to wimp out and downsize to a sissy six-cylinder power plant. Figure 2 from the drawing sure looks like a V8 engine block to us. Rrrrrr.

Cryptocurrency Patents Are HOT and Global!
Posted: 3/21/2018

According to the World Intellectual Property Organization (WIPO) website, granting of digital currency and/or blockchain patents continues to grow steadily. A very respectable 971 patents in this category were granted in 2017, and that number grew to 1,016 patents in 2018.

Of greater interest than the total number of patents granted worldwide is where those patents were granted. The U.S. was NOT the leader in digital currency and/or blockchain patents in 2018. It was China that led the pack with 790 patents, while the U.S. was a close second, granting 762 patents in this category. Equally surprising was the No. 3 slot – South Korea with 161 patents issued – and the No. 4 spot – Australia with 136 patents. Canada and Indian tied for fifth place with 67 patents issued by each of those countries. The UK granted 36 digital currency and/or blockchain patents in 2018, followed by Singapore with 28 patents granted, and eighth place goes to Japan with 12 patents in this category. All other nations granted less than 10 patents in this area. France, Germany, Israel and Russia each issued just two digital currency and/or blockchain patents in 2018!

Readers of this column know that we cannot help but look back. Well, we did, and it appears that the first blockchain-related patent was granted way back in pre-Internet, pre-cell phone, pre-PC 1978 when IBM was granted U.S. Patent No. 4,074,066 for a “Message Verification and Transmission Error Detection by Block Chaining.” Go Big Blue! But we really have to ask if Team Armonk really knew what they had?

U.S. Ranks No. 2 in Patent Protection
Posted: 3/21/2018

The U.S. Chamber of Commerce Global Innovation Policy Center (GIPC) ranks countries each year in terms of the effectiveness of the protection of the patents they grant. In the GIPC rankings for 2018, the U.S. came in second with a rating of 7.5 (on a scale of 10.0). The number one ranking went to you-will-never-guess who. Go on, guess? Nope. Guess again. Nope. The top rating of 7.75 when to Singapore. Which you just learned from the previous article holds eighth place for the issuance of digital currency and/or blockchain patents. Singapore is also known as the country that punishes its criminals with public canings. We sure hope that applies to patent infringers!

The U.S.’s number two ranking is not nearly as good as it sounds since the U.S. tied for second place with the UK, the Netherlands, Switzerland, Sweden, Spain, South Korea, Japan, Ireland, Germany and France! If we filter out the small countries, the U.S. ranked equally with the UK, Korea, Japan, Germany and France, but out-ranked Australia (a 6.25 rating), Canada (a 5.75 rating), and China that came in with a score of just 5.5.

The worst country for patent protection is almost not a surprise – Venezuela with a rating of just 0.75!

To learn how the Global Innovation Policy Center computes its rankings, you can read or download the report at the Global Innovation Policy Center website.

There Are Patents, and Then There Are Patents
Posted: 3/21/2018

We are approached every day – literally every day – by inventors and business executives who own patents granted by a small nation – Singapore or Portugal or Mexico or South Africa are just a few examples. And our response to them – and they are mightily upset when they hear it – is that their patents have essentially NO value. We tell them that they need to secure a U.S. Patent and, if possible, an EP and Chinese Patent.

Our request that the inventor or business secure a U.S. Patent is not because we are America-centric Americans running an America-centric business, but because the U.S. is the largest economy in the world, so a U.S. Patent has the greatest value and is the most salable of patents.

Here is what the holder of a Singapore (or drop in any other small nation) Patent has to realize. First of all, a patent is a bargain. It is a deal with the nation that issued it that in exchange for disclosure of the invention that nation will grant the patent holder exclusivity to his or her or its invention in that nation for a fixed period, most often 20 years. That means that your Singapore Patent is a public document that anyone in the world can access.

And that means that any business anywhere in the world can blatantly infringe your patent, and as long as they do not manufacture the product or sell the product in Singapore, there is NOTHING you can do about it. They can manufacture the product in the U.S., China, Israel or India, and sell it all over the world – except to the five million residents of Singapore or to any Singapore businesses - and the patent holder is helpless to do anything about it!

Additionally, if the infringer gets brazen, and sells the product in Singapore, it will not likely be financial viable to sue the infringer for infringement since any claim will be based on royalties on infringing products sold in Singapore, and Singapore – or Portugal or Mexico or South Africa – is just not a big enough economy to generate the tens of millions in sales that would be required to make patent infringement litigation worth the cost of filing and pursuing the lawsuit!

The sad reality is that if a company came across a really brilliant Portuguese or New Zealand patent, the smartest strategy would be to infringe the patent, and manufacture and sell a product based on that patent in every other nation on the face of the earth except where the patent was granted!

The four largest economies in the world today are the U.S., China, Japan and Germany. Get yourself patent coverage in those countries, and you will have a valuable, global IP asset. Take advantage of an EPO patent to get additional coverage in France (No. 6), the UK (No. 7) and Italy (No. 8), and you really have coverage.

Who Is the Father of VoIP? How about Chester Gould?
Posted: 2/15/2018

We feature in this month’s IP MarketPlace a patent that is foundational to Voice over IP (VoIP), the technology that makes sending voice and video and other messages from one person to another quick, easy, practical and affordable. As you will soon learn, the concept had a few starts and stops along the way.

It really goes back to 1931 when Chester Gould introduced the Dick Tracy comic strip. Detective Tracy was a tough, no-nonsense big city crime fighter who – very much like Batman – fought criminals with strange names and personas, like Flattop Jones and B.O. Plenty. Dick Tracy reached its height in American culture with a feature film based on the character that starred Warren Beatty as Dick Tracy and Madonna as Breathless Mahoney, a key witness to a murder. In 1946, Dick Tracy went high-tech with the introduction of his Wrist Radio, a miniature radio that Tracy wore on his wrist like a watch.

In 1964 – even though a Wrist Radio was still a figment of Chester Gould’s imagination and only existed in the Dick Tracy comic strip – the Wrist Radio was replaced with the Wrist Radio TV. Now Tracy could communicate both audibly and visually with police headquarters.

Just to prove that great minds do think alike, the same year that Dick Tracy introduced his Wrist Radio TV, Ma Bell (what we called AT&T before it was broken up into operating companies) used the 1964 World’s Fair to introduce its Picturephone. It was called the “Mod 1” for “Model 1." Fairgoers in Queens, New York, waited on line at the Bell Telephone booth for an opportunity to communicate in voice and video with a complete stranger who was hooked up to a Mod 1 at Disneyland in Anaheim, California – on the other side of the continent! Users of the Picturephone Mod 1 got to talk to and see a black-and-white 30-frame-per-second image of the other person. Users were coached to stay perfectly motionless within a 16 x 21-inch frame to stay in view at the other end.

Using a Picturephone at that time costs $16 for three minutes. That’s $16 in 1964 dollars when gas was 25 cents a gallon. The Picturephone concept caught the attention of Stanley Kubrick who included one in 2001: A Space Odyssey. In the film, a Howard Johnson's on a space station included a Picturephone so space travelers could call home. The fact that the Picturephone was at a Howard Johnson’s appears now in retrospect as an eerily strange omen of things to come.

Over the next 30 years, despite failure after failure, AT&T poured billions into its Picturephone concept. In 1969, AT&T introduced the Mod II. It featured a 251-line, 30 frame-per-second black-and-white image on a 5 x 5.5-inch screen. AT&T gave it the old corporate try, and attempted to sell it to businesses that would use it for meetings and conferences. It was not until 1971 that Ma Bell realized there was really no market for the Mod II and decided to cut its losses.

Well, not really. In 1992, AT&T re-launched the PicturePhone, but this times as the VideoPhone 2500. It had a small flip-up LCD screen that produced a grainy color image. It was introduced at $1,500 which was cut to $1,000 and then to $30 for an overnight rental. It took another two years for AT&T to finally and totally abandon the concept.

Today, Skype and Facetime and various other services do what the AT&T Picturephone and VideoPhone could not do What is the lesson? In our humble view of the world, while we have to credit AT&T for having the foresight to see the need for such a product, and the courage – or foolishness – to invest billions in the concept, the Picturephone and VideoPhone were doomed to fail from the beginning because they were conventional, landline, telephone-based products. Ma Bell attempted to get the concept to work over a single-copper-wire telephone system that had not changed significantly since Alexander Graham Bell received his telephone patent in 1876.

In order for us to communicate with each other effectively and practically via both audio and video, we first needed the telecom revolution that produced PCs and laptops and the Internet and smart phones and WiFi and – most critical – the bandwidth to successfully transmit both audio and video signals back and forth between parties. U.S. Patent No. 7,852,831 for “Method and system for providing private virtual secure Voice over Internet Protocol communications” covers the foundational technology that makes Skype and Facetime and similar services possible. We needed the Internet to make this concept really work, and it came along just when we needed it!

Advice for All Inventors: How to Make Your Patents More Attractive and More Valuable!
Posted: 1/14/2018

Last November, we addressed why patents do not often appear as assets on many company Balance Sheets. In December, we explained the additional value – beyond just the monetary value as an asset – that patents represent for the company that holds them. Both of these articles were specifically addressed to the benefit of company executives. If you missed either or both of them, they appear at the Patent Leather page at our website.

We start 2019 with advice for inventors who will not be building a factory to manufacture products but who hope to sell or license their patents. The advice we provide in this issue of Patent Leather is how to both improve the attractiveness of your patents and increase their value. Through no small coincidence, we have examples of all three strategies in the properties featured in this month’s IP MarketPlace.

There are three actions an inventor can take that will both increase the salability of his or her patent – that is, get more potential buyers and licensees looking at the patent or patents – and make the patent or patents more valuable when it comes time to talk dollars with a serious buyer or licensee.

1. File for a Continuation: We are big fans of the low risk/high reward option, and filing for a continuation is the classic example of that. If you file for a continuation, and the company that buys your patent does not need it, you are out a few hundred dollars (Low Risk). But if the company acquiring your patent can use the continuation (or divisional or continuation-in-part) that you filed to secure a new patent, it dramatically increases the value of your patent-plus-continuation portfolio (High Reward)!

Patents are a unique asset class because – unlike virtually any other asset a business can acquire – they cannot be modified. A business can buy a building that its former owner used as a factory and use it as a factory. Or the new owner can convert the building into offices, or a warehouse, or retail space, or any one of several other applications. The new owner can add windows and doors, or block unneeded windows and doors, or make endless other modifications. You cannot do that with a patent. But a patent that comes with a continuation enables the buyer of the portfolio to file for a new patent that is based on the original patent but has claims added by the buyer to fine tune the second patent to the new patent owner’s specific needs!

The Artificial Intelligence portfolio we feature this month includes a U.S. Patent and a whopping three Continuations-in-Part. A very smart move on the part of this very smart inventor!

Consult with your patent attorney as to whether a continuation, continuation-in-part or divisional makes the most sense, but remember that you MUST file for a continuation before your patent is granted!

2. File a PCT Application: This also falls under the Low Risk/High Reward option. Very few companies just do business in the U.S. anymore. It is “flat world” in which every business has to compete globally with every one business on the face of the earth. Having a U.S. Patent – like most of the inventors we represent – is fine, but having a PCT Patent Application as part of the portfolio makes the portfolio more attractive to multinational businesses and makes the portfolio more valuable when it’s time to talk Dollars or Euros with a prospective buyer.

With a PCT Patent Application, the new owner of the portfolio can file for additional national patents in each of the countries where it does business and plans to do business. Like a continuation, you have to file for a PCT Patent Application while while your U.S. Patent Application is active. If the buyer of your U.S. patent does not need the PCT Patent Application, you are out a few hundred dollars (Low Risk). If the buyer of your U.S. patent needs that PCT Patent Application, it will add significant value to your portfolio (High Reward)!

The secure data transfer portfolio we feature this month comes with both a U.S. and a European Patent and an active PCT Patent Application. A very wise move on this wise inventor’s part!

3. Think About a Trademark: One of the reasons a business may consider buying your patent is to create a patent-protected product based on that patent. If – during the invention and patent application process – you’ve come up with a catchy brand name for the product created by your patent, file for a Trademark Application. This is yet another Low Risk/High Reward opportunity.

Going to market with just a patent versus going out into the world with a portfolio that includes a patent-and-trademark-or-trademark-application portfolio is a NO brainer! If the company considering your patent likes the trademark, it makes the entire portfolio more attractive to a buyer and more valuable at negotiation time (High Reward). If the buyer does not like or does not need the trademark, you are out just a few hundred dollars (Low Risk).

The clever inventor of the ergonomic, adjustable cart patent featured this month also filed two Trademark Applications for two clever trademarks: “Mobile Utility Lift Ergonomics” and “MULE.”

We are quite frankly surprised that more patent attorneys do not recommend these three options to their clients. When many inventors contact IPOfferings about representing them, their patents have been granted and so Options 1 and 2 are no longer available to them.

Are You Taking Advantage of the True Value of Your Patents?
Posted: 12/14/2018

Last month, we wrote about why patents do not often appear as assets on many company Balance Sheets. This month we also address the issue of patent value – but not their monetary value – the value they create for a company’s image, brand, stature and competitiveness. Every company is looking for a competitive advantage, yet many companies fail to take advantage of a competitive advantage that is unique to its business. Amazingly, many businesses have just such a competitive and unique advantage, and it is right under their corporate noses!

We like to think that we are fairly effective marketers. After all, we got you to subscribe to our newsletter and read this article, didn’t we? As marketers, we find it amazing how many companies – from start-ups to large corporations, privately held to public companies – keep their patents under a proverbial bushel. In addition to the financial value they add to a company’s Balance Sheet, and in addition to the technological value they generate by enabling companies to create products and services from the inventions covered by their patents, there is yet a third and very critical value that patents have, and this third aspect of the value of a patent is often totally overlooked by the management team.

Patents help create an image, a brand, a message and a competitive advantage for a company. Company A owns no patents while Company B owns several patents. Which is the more progressive company? Which is the high-tech enterprise? Which company is bringing next-generation, cutting-edge products to market? Which company really delivers value for its customers? Everyone will answer those questions with the same answer! Yet despite the obvious marketing, branding, image and competitive value that patents give a company, few companies do anything to promote their patents!

So…if you are looking for a corporate New Year’s Resolution, here is one that can be easily implemented, it will add lasting value to your business, and it will cost almost nothing! It comes in five parts. Here goes.

1. List All of Your Patents at Your Website: We are constantly amazed at how many companies do not do this. Add an “Intellectual Property” or “XXX Company Patents” page to your website and list all of your patents. If you have older patents that have expired, list them anyway. It just shows for how long your business has been an innovator! Make each patent number a link to either a .pdf of the patent or the patent’s listing at Google Patents so visitors can read the Abstract, Claims and other specifics of the patent.
2. Identify All Products that Are Covered by a Patent: Add to each product listing at your website what patent or patents cover that product. What better way to promote the innovation and uniqueness of one or several of your products than identify the patent or patents that cover the technology behind that product. This also provides the added advantage that if you ever need to enforce a patent, you clearly meet the requirement of “marking” your product with the patent(s) covered by it.
3. Add Patent Numbers to Your Product Literature: Make sure that every catalog, flier, data sheet or other piece of sales literature includes the patents that cover that specific product. This should extend to service bulletins, tech notes, owner’s manuals and any other product-related documents. Make sure that everyone even thinking about buying a product from your company, as well as everyone who has purchased a product from you, knows that it is state-of-the-art and uses a patented technology!
4. Announce All New Patents: When your company is granted a patent, issue a news release. Let the world know that your company continues to innovate, and let the competitors eat their hearts out! Announce in the company newsletter and your customer newsletter when a new patent is granted and recognize the inventors for the corporate contribution they are making.
5. Take Advantage of Patent Pending: Marking your product with the patent or patents that cover the technology of that product is a component of patent law, one way to fend off competitors who might think about coming out with a competing product that infringes your patent, and an effective strategy for clearly differentiating your products from those offered by the competition. Do not forget that when you file a patent, you have the right to mark all products that might be covered by that patent when it issues as “Patent Pending.” And since the average patent pendency these days is about 30 months, that gives you two and a half years of extra patent protection. And two and a half years of promoting the high-tech, cutting-edge technology that symbolizes your business!

And best of all, none of these actions really cost anything other than some website and literature edits!

Does the Value of Your IP Appear on Your Balance Sheet?
Posted: 11/20/2018

As 2018 comes to a close, most businesses are – and, if not, should be – thinking about 2018. And a key question that every business has to ask is this: Is the value of our patents and other intellectual assets reflected in our Balance Sheet? And - if not - is 2018 the year that we decide to reflect the value of those assets in the company Balance Sheet?

Since over half of our readers are corporate executives, this should be an important issue for those readers to consider. Except for intellectual assets and a few other items, assets appear on a business’s balance sheet through normal day-to-day accounting activities. You issue an invoice, and the amount of the invoice is added to your Accounts Receivables column. A customer pays that invoice, and your Accounts Receivables balance declines while your Cash on Hand increases.

Your buy a new machine for the factory, and your cash expenditure is swapped for a new asset under Plant and Equipment. You pay an invoice, and your Cash on Hand decreases by that amount as does your Accounts Payable balance. And so it goes.

We are reminded of the classic ballad, Cats in the Cradle, by Harry Chapin. He sings “My child arrived just the other day; came to the world in the usual way…” Most children and most corporate assets come into the world in the usual way – through widely practiced accounting procedures. These practices are part of GAAP (Generally Accepted Accounting Principles), the accounting standards developed and enforced by the SEC (Securities and Exchange Commission).

But IP – especially patents, but also trademarks and other intellectual assets – are different. There is NO account action that puts a patent on a business’s balance sheet other than when a business buys a patent. The company cuts a check for the patent, and its Cash on Hand decreases while its Intangible Assets column increases. But most patents in Corporate America are NOT purchased. Most are – for want of a better term – home grown.

Your company's R&D staff, or engineering team, or some other group of employees – or even a single employee – come up with an ingenious idea for a new technology, a new product, or an improvement or enhancement to a current technology or product. So they file for a patent to protect the invention. The salaries and benefits of those who developed the invention are regular business expenses that are expensed in the year they occur. The filing fees for the patent, and the fees paid to a patent attorney to prosecute the patent application are also expenses that are expensed in the year they occur.

The current pendency for a U.S. Patent application is about 30 months. So two or three years after the patent application is filed a notice shows up from the Patent Office that the patent has been allowed, and a few weeks later a gorgeous patent with a bright red ribbon on it shows up in the mail.

The R&D team celebrates. NO accounting transaction is triggered by the Notice of Allowance for receive when your patent application is approved, and NO accounting transaction occurs when the actual hard-copy patent arrives. The lead inventor gets a bonus or at least an Atta Boy from the boss. The patent might be framed and hung on the wall, but it will most likely go into a file drawer. It should be added to the company website, but most patents are not. How to gain optimal marketing value from your IP is a totally separate, but largely underutilized, opportunity that we will address next month.

What does NOT happen is there is NO accounting transaction that accounts for the value of the patent in your accounting system. Fact is, many companies own patents and patent portfolios that are NOT recorded on their books as assets. Adding the value of these assets will increase the net worth of your business, and that has all kinds of downstream advantages, such as making it easier to borrow money or sell stock, or go public if that is your plan down the road. Or, for that matter, go private if that is your plan down the road. And – maybe best of all – you do NOT pay any taxes on your newfound wealth!

We are not accountants, and we are not providing legal or accounting advice. You need to consult with your CPA for the exact procedure. However, if you have a third-party valuation done of all of your granted patents – and trademarks and other IP – the unreported value of these assets can be added to your Balance Sheet. Not immediately, there is a process that your CPA can explain to you and implement.

And – as fate and convenience would have it – IPOfferings provides not one, but three, patent valuation services. You do not have to use our services, but we are a good place to start when you make the decision to add the value of your unreported IP assets to your business’s balance sheet. If this might be in your future, take a look at the data sheet for our Patent Valuation Services.

Next Month: Are you taking advantage of the branding, image and competitive factors that patents create for your business?

How Did We Get from Luddites to the Modern Computer?
Posted: 10/15/2018

At a meeting a few weeks back, someone mentioned Luddites. Only two of the meeting participants knew who the Luddites were while three did not. So for the 60% of the population that missed the Luddites in World History – and how they got us to the modern computer – here goes.

The Industrial Revolution automated many processes. One of the greatest beneficiaries of automation was the textile industry. The Jacquard Loom was invented by Joseph Marie Jacquard in France in 1804, and for decades the French managed to keep the invention to themselves. But good technology spreads fast, and the Jacquard loom caught on in England in the mid-19th Century and was a key driver of the Industrial Revolution in Great Britain. In those days, England imported raw cotton from its current and former colonies, and exported finished fabrics. The Jacquard loom used cards – wooden plates with holes punched in them – to essentially program the loom to produce a certain weave. In fact, the original weave used by M. Jacquard is still around today and is known as a “Jacquard weave.”

It is not clear where the term “Luddite” came from. The early Luddites claimed they were followers of one Ned Ludd, a fictitious textile factory worker who smashed up looms in the factory where he worked, the anti-automation Robin Hood of his day. The Luddites claimed that automated textile looms stole jobs from workers, violated the British labor laws of that time, and would lead to the destruction of mankind. We know today that the exact opposite is true. Don’t we?

Those who are accused of being a Luddite today – like the person in this meeting last week – do not break into factories, they just make anti-technology comments that inflame high-tech junkies. For example, these Luddites suggest that there is some benefit to taking out and unfolding a map to see exactly where you are. Or they prefer snail-mailing a birthday card with a handwritten note in it. Or they like using an actual ticket when they go to the movies instead of an image on their smartphone. Pretty radical stuff from these 21st Century Luddites!

Back to the source of all this, the Jacquard loom. It used a belt of loom cards. Each card had a series of holes in it that lifted up and dropped back down the beam that carried the warp thread. As the fill thread went back and forth across warp thread, the loom card determined if the fill was above or below the warp thread, putting a pattern into the fabric. Where there was a hole, the warp beam would drop down. No hole? It stayed up. A pattern woven into a fabric is most apparent in Damask dinner napkins that have elaborate – often floral – patterns woven into them, or in bedspreads and pillow covers that have raised designs woven into them.

U.S. Patent No. 634,037 for an “Apparatus for Weaving Pile Fabrics” is one of the first American patents to reference the use of a loom card. It was granted in 1897 to one Richard Smith, a carpet manufacturer in Scotland. He manufactured what is today known as “pile carpet,” floor covering with a pattern woven into the raised fibers.

One cannot look at the Jacquard loom cards and see an amazing similarity to a key element of the earliest generation of computers, the punch card. Just as Jacquard punched holes into wood plates to direct his loom, the holes punched into the cards provided data for the earliest computers. The top left corner of the punch card was clipped off so the cards could not be put in backwards!

How did hackers mess up computer operations in the days of punch cards? They used an Exacto knife to cut a few extra holes in a card to make the computer go nuts! Legend has it that a bank employee back in the 1960s figured out what each punched hole represented, made up a punch card that he dropped into the stack, and he got a check in the mail for some huge amount of money. True? Who knows, but it’s a great story.

The paper punch cards were replaced in the seventies with the IBM “Mag Card” that was about the same size as the punch card, but it stored data in a digital format using iron particles held to the card magnetically in a pattern that the computer could read. The mag stripe on credit cards is a descendant of this technology. The Mag Card morphed into the floppy disk. And from the floppy disk came hard drives, diskettes and the memory sticks of today. And all this was inspired by a French textile manufacturer over 200 years ago!

So Who Really Invented Voicemail?
Posted: 9/17/2018

Jimmy Carter was President, the Iranians were holding 52 American hostages, Dallas was the top-rated TV show, the Olds Cutlass was the best-selling vehicle, and the world was introduced to voicemail. The year was 1980. Ah, for the good old days.

Voicemail was launched by Televoice International that also coined the term “voicemail” (no argument about that). The company later changed its name to Voicemail International and eventually to just VMI. Looking at things from a patent perspective – as we so often do – we had to ask ourselves who actually invented voicemail? Credit is typically given to Gordon Matthews who has been known for the last four decades as the “father of voicemail,” but there were actually a few voicemail-related patents that preceded his.

U.S. Patent No. 4,124,773 - Audio Storage and Distribution System: This patent was granted November 11, 1978, two years before any voicemail products were introduced. The inventor was Robin Elkins and and he eventually sold his patent to VMI. Here is the abstract: This invention relates to an electronic system and a method for storing and distributing audio signals over existing communication lines. The system comprises a compressor for compressing in a predetermined manner the waveform amplitude of an input analog signal, thereby forming a compressed analog signal. The compressed analog signal is then converted into a digital signal by an analog to digital converter. A digital interface subsystem stores and retrieves selected ones of the digital signals for transmission over a communications line. At a remote end of the communications line the digital signal is converted back to its analog compressed signal representation by a digital to analog converter. The compressed analog signal is then expanded in a manner complementary to the compressor operation, thus reconstructing the analog signal. A selector generator is provided at the remote end of the communications line for generating a command signal over the communications line to command the digital interface subsystem to select the desired one of the stored digital signals.

U.S. Patent No. 4,260,854 - Rapid Simultaneous Multiple Access Information Storage and Retrieval System: This patent was granted April 4, 1981, one year after Televoice introduced its voicemail product. It introduces the concept of “…multiple simultaneous…audio dictation…” The inventors were Gerald Kolodny and Paul Hughes, and the patent was assigned to Sudbury Systems. Here is the abstract: Rapid simultaneous multiple access information storage and retrieval system including multiple simultaneously available audio dictation inputs and multiple simultaneously available audio outputs, an array of magnetic recording and playback instruments, and a controller operating under computer command for multiplexing the interchange of audio signals between inputs and outputs on the one hand and the magnetic recorder storage means on the other and at the same time for generating control signals to and from the input and output terminals.

U.S. Patent No. 4,371,752 - Electronic Audio Communication System: This patent was granted February 2, 1983, three years after Televoice introduced voicemail. It included additional features over the first two voicemail patents, such as the ability to forward voicemail messages. The inventors where the previously mentioned Gordon Matthews plus Thomas Tansil and Michael Fannin, and the patent was assigned to ECS Telecommunications. Here is the abstract: An advanced electronic telecommunication system is provided for the deposit, storage and delivery of audio messages. A Voice Message System interconnects multiple private branch exchanges of a subscriber with a central telephone office. Individual subscriber users may access the Voice Message System through ON NET telephones or OFF NET telephones. The Voice Message System includes an administrative subsystem, call processor subsystem and a data storage subsystem. The Voice Message System enables the user to deposit a message in data storage subsystem for automatic delivery to other addresses connected to the system. The Voice Message System also enables a user to access the system to determine if any messages have been in the data storage subsystem for him. Pre-recorded instructional messages are deposited in the data storage subsystem for instructing a user on his progress in using the system. A Universal Control Board is a programmable electronic digital signal processing means for controlling certain functions of the administrative subsystem, call processor subsystem and data storage subsystem.

So who really, really invented voicemail? We go with Robin Elkins.

Samsung Owes Apple $539 Million
Posted: 8/15/2018

Remember the Apple-Samsung patent infringement lawsuit and trial back in 2012? One would think the litigation had long been settled, but not so. After numerous appeals and appeals of appeals, a U.S. District Court jury in San Jose was asked to determine the damages that Samsung owes Apple for its infringement of a handful of Apple patents.

The jury came up with $539 million, but this is more a moral than a cash victory for Apple. With $256 billion in cash in the bank – yes, billion with a “B” – if Samsung were to cut Apple a check, it would be petty cash. Earlier this month, Apple was the first corporation to hit a Market Cap (all of a company’s outstanding shares times the currently traded per-share price) of $1 trillion!

It does not look like Samsung will be writing a check any time soon. Samsung’s response to the jury’s ruling was “Today's decision flies in the face of a unanimous Supreme Court ruling in favor of Samsung on the scope of design patent damages. We will consider all options to obtain an outcome that does not hinder creativity and fair competition for all companies and consumers.”

Apple’s response was no surprise. "We believe deeply in the value of design, and our teams work tirelessly to create innovative products that delight our customers. This case has always been about more than money. Apple ignited the smartphone revolution with iPhone and it is a fact that Samsung blatantly copied our design. It is important that we continue to protect the hard work and innovation of so many people at Apple."

Think about this: Just 20 years ago, Apple was almost bankrupt. When Steve Jobs returned as interim CEO in 1997, Apple got a $150 million cash infusion from Microsoft – yes, the Bill Gates Microsoft – and the company went on to turn things around with a dazzling array of new products. We have NO Apple equipment at IPOfferings, we are in awe of their success!

Regular readers of this column know we love stuff like this, so here goes. Steve Jobs was given up for adoption by his birth-mother and was adopted by Paul and Clara Jobs whom he always referred to as his “parents.” At age 27, he searched out and found his birth-sister who was also given up for adoption, Mona Simpson, and they had a close relationship for the rest of their lives. Jobs took a $1 a year salary when he returned to Apple as CEO. When he died in 2011, Steven Jobs was the 110th richest person in the world.

IPOfferings Selected by National Tsing Hua University to Represent It
Posted: 8/15/2018

National Tsing Hua University (NTHU) has been called the “MIT of Asia.” It is a prestigious research university composed of seven colleges offering 22 graduate programs. It was founded in 1911 by the Qing Dynasty on the site of a former royal garden in Beijing. Over the next 50 years, NTHU grew in its stature and reputation. When the Communists overthrew the legitimate Chinese government in 1949, the government fled to Taiwan, taking National Tsing Hua University with it and re-locating the institution to Hsinchu City.

Today, NTHU serves over 15,000 students with an academic staff of over 1,000, and it owns an extensive portfolio of patents covering the multiple technologies in which it conducts basic research.

Over the last half century, while those left on mainland China endured cultural revolutions, tyranny and other hardships under communism, the Chinese on Taiwan prospered under a capitalist government that morphed over time from a military dictatorship to a multi-party democracy. NTHU prospered along the way.

Like most U.S. universities, National Tsing Hua University was not permitted to sell its patents, but could only license them to Taiwanese businesses. That just recently changed, and IPOfferings is very pleased and honored to be selected as the exclusive broker representative of NTHU. As a starting point, National Tsing Hua University is offering for acquisition its extensive portfolio of 53 U.S., Chinese, Taiwanese, Japanese and Korean OLED patents and applications which will be featured in the next issue of IPMarketPlace. You can request information on the NTHU OLED portfolio atpatents@IPOfferings.com.

USPTO Issues U.S. Patent No. 10 Million
Posted: 7/24/2018

Since the first U.S. Patent was issued in 1790 – it was signed by George Washington and the patent examiner was Thomas Jefferson – we’ve come a long way. Last month, American icon Raytheon Company received U.S. Patent No. 10,000,000 for “Coherent LADAR using intra-pixel quadrature detection.”

Alvin Toffler predicted in “Future Shock” way back in 1970 that in a “post-industrialist” world change would occur at an increasing rate, leaving people suffering from "shattering stress and disorientation." Today we call that “innovation” and we got used to it! To put this innovation milestone in perspective, here is a hyper-cruise through U.S. Patent history, one million patents at a time.

1908: It took 118 years to reach U.S Patent No. 1,000,000 for a “Vehicle-tire.” The automobile had just come onto the American scene and Henry Ford was cranking them out by the thousands, so a new tire design made sense. Why they hyphenated the title we do not know. The inventor was one Francis H. Holton who assigned his patent to the B. F. Goodrich Company, an American icon until it was acquired by Michelin of France.

1935: It took much less time – just 27 years – for the Patent Office to grant U.S. Patent No. 2,000,000 for a “Vehicle wheel construction.” Ironically, this patent was also auto-related. The inventor was one Ledwinka Joseph and the assignee was the Edward G. Budd Manufacturing Co. that today is owned by ThyssenKrupp of Germany.

1961: It took another 26 years for U.S. Patent No. 3,000,000 to issue for an “Automatic reading system.” This patent was invented by Kenneth R. Eldredge and assigned to yet another American icon, General Electric Company.

1976: Just 15 years later, U.S. Patent No. 4,000,000 was granted for a “Process for recycling asphalt-aggregate compositions.” The inventor was one Robert L. Mendenhall, the founder of the Las Vegas Paving Co. Just think of all the casino parking lots that needed paving over the past four decades!

1991: Another 15 years passed until U.S. Patent No. 5,000,000 for “Ethanol production by Escherichia coli strains co-expressing Zymomonas” was granted to the University of Florida. The inventors were Lonnie O. Ingram, Tyrrell Conway and Flavio Alterthum.

1999: The pace of innovation really picked up in the 1990s because it took just eight years for U.S. Patent No. 6,000,000 for an “Extendible method and apparatus for synchronizing multiple files on two different computer systems.” Two computers talking to each other was cutting edge in 1999! The inventors were Jeffrey C. Hawkins and Michael Albanese, and the assignee was another American icon, 3Com Corporation, now a unit of super icon Hewlett-Packard.

2006: Just seven years later, U.S. Patent No. 7,000,000 for “Polysaccharide fibers” was granted. The inventor was John P. O'Brien and the assignee was yet another American icon, E. I. du Pont de Nemours and Company.

2011: From eight years to seven years to just five years for U.S. Patent No. 8,000,000 for a “Visual prosthesis” to be granted. The inventors were Robert J. Greenberg, Kelly H. McClure and Arup Roy, and the patent was assigned to Second Sight Medical Products Inc. which is still in business and is traded on the NASDAQ.

2015: Innovation charged on, and in just four years U.S. Patent No. 9,000,000 was issued for a “Windshield washer conditioner.” The inventor was one Matthew Carroll who assigned the patent to his company, Wiperfill Holdings LLC. The invention captured rain water, deionized it and used it to refill the windshield washer reservoir. There is no record of this invention ever being commercialized.

2018: Here we are, just three years later, and U.S. Patent No. 10,000,000 has been granted.

Here are the years between each millionth patent:
U.S. Patent No. 1,000,000: 118 years
U.S. Patent No. 2,000,000: 27 years
U.S. Patent No. 3,000,000: 26 years
U.S. Patent No. 4,000,000: 15 years
U.S. Patent No. 5,000,000: 15 years
U.S. Patent No. 6,000,000: 8 years
U.S. Patent No. 7,000,000: 7 years
U.S. Patent No. 8,000,000: 5 years
U.S. Patent No. 9,000,000: 4 years
U.S. Patent No. 10,000,000: 3 years

There Is Your Invention and Then There Is Your Patent
Posted: 6/18/2018

We've come across this issue many times over the many years we’ve been in business working with and representing inventors and their patents. However, we have seen this issue more and more in just the last few months, so we decided it was time to address it straight on: An inventor needs to clearly differentiate in his or her mind between what the invention is and what the patent covers!

Confused? Good. We will call him “Joe.” Joe comes up with a great idea, so he engages a patent attorney to file and prosecute a patent application for his invention. Now Joe has rolling around in his head this terrific innovation that has multiple aspects to it. Joe and his attorney write up a set of claims that covers all the aspects of Joe’s invention, and files the application. Then two things happen.

In the process of prosecuting the patent, the patent examiner will either question or outright deny one or more or sometimes all of the claims in the initial application. So Joe and his attorney work with the patent examiner. They may drop a few claims and re-word a few other claims to address the patent examiner’s concerns. And about two years later – current average patent pendency is about 25 months, down from 37 months just a few years ago – a patent is granted. But what is specifically covered by the claims in the patent is different – sometimes significantly different – than the invention that is rolling around in Joe’s head. The reality is that very few granted patents include all of the claims in the original application.

The second factor is that Joe’s invention – not the patent, but the invention rolling around in Joe’s head – is evolving. Joe may have done some testing or prototyping, and the technologies related to the invention may have changed. So two years down the road when the patent finally issues Joe has a greatly expanded invention from what he and his attorney sat down to discuss, and what they applied for, two years ago.

Remember also that the Claims are the Patent. The abstract is fine, and the drawings you submitted should help explain the invention, and the other narrative data is all great. But in terms of what is patented – and what can be asserted against an infringer – is in the Claims.

Here are just a few recent examples. A client was surprised to find that the testing equipment covered in his patent must have a separate ground wire. If it did not have a separate ground wire, it was not covered by the patent. Another inventor was convinced that his patented point-of-sale invention included the ability of customers to return to the store where they made their purchase to make payments on their account. Great idea, but not in the patent! One inventor is convinced he has a patent for a wearable video security device – there is even a figure in the patent that shows a person wearing the device – but the claims make NO mention of a person wearing the device!

As a patent broker, we can only sell what is in the patent! We do not represent the invention that is still rolling around in the inventor’s brain and psyche – and that may be, and often is, greatly expanded beyond what is in the patent – we represent the patent, and the patent consists of the claims, regardless of how well or how poorly they are written.

The solution? Always, always, always file for a continuation before your patent is granted. That will give you the opportunity to add new claims for your second patent - and subsequent patents - while retaining all the claims and the Priority Date from your first patent!

Why Patents Are Such a Unique Asset
Posted: 5/17/2018

Among all company assets – from cash and accounts receivables to buildings and equipment – a patent is a totally unique asset for several reasons. And because of its special status, there are many businesses – large and small – that do not even record the patents they own on their books!

We are reminded of the Harry Chapin classic, Cat’s in the Cradle, in which he sings that his son “came to the world in the usual way.” Most assets come into existence – that is, show up on a company’s Balance Sheet – in the usual way – via “generally accepted accounting principles.” You invoice a customer, and the value of that invoice is added to your company’s Accounts Receivables. Your customer pays the invoice, and the value of your Accounts Receivables decreases while the value of your Cash on Hand increases. You buy a forklift truck for the warehouse. The invoice shows up and is added to your Accounts Payables – a line item under Liabilities. But when you pay the invoice, your Accounts Payables decreases as also does your Cash on Hand, but the value of the truck is now added to your Equipment line under Assets. And so it goes. Inventory, raw materials, accounts receivables, accounts payables, real estate, equipment – you name it – are all properly recorded on the Balance Sheet automatically as regular, ongoing accounting transactions.

Patents – and also copyrights and trademarks – are different because they come into existence in a totally different fashion. Your R&D staff, Engineering Department or New Product Development team invent something, and they file for a patent for the new technology. R&D, Engineering and New Product Development costs are almost always written off in the year they occur since they are regular operating expenses. The costs to prosecute the patent application are also written off in the year they are expended since they are regular operating expenses.

Then one day, two or three years after the patent application was filed, a granted U.S. Patent shows up. Some companies put them in a file drawer, while others have them framed and hung on the wall. There are a few companies that make a nice living duplicating the first page of a patent on a gorgeous plaque so companies can display all their patents in the lobby or conference room. Everyone celebrates, the patents are covered in the company newsletter, and the named inventors send copies of the patent to their mothers.

But…since there is NO accounting action that occurs as a result of that patent showing up in the mail, this valuable asset does not automatically appear on the company’s Balance Sheet like the forklift truck did. This means that any company that is developing and patenting new products, product improvements and enhancements, and new methods and apparatuses – and receiving patents for these new technologies – is very often NOT including the new patents it is granted in the Intangible Assets line on its Balance Sheet. As a result, the true value of many businesses is dramatically understated on their financial statements because their patents are not recorded as assets! For a company seeking financing or planning to go public, these unreported assets could be critical to their success in either of these endeavors.

The solution is to have all IP assigned to your business valuated by a reputable third party. The value of these intellectual assets can then be included in the Notes to your financial statements and added under Intangible Assets on the Balance Sheet. And fortunately for readers of this article, IPOfferings provides three separate Patent Valuation Services.

We are NOT providing financial, accounting or tax advice. We are simply explaining in general terms why patents do not often appear on a company’s Balance Sheet. If your company faces this issue, you need to secure professional advice and counsel as to the exact procedures to follow to add these assets to your financial statements.

There’s A New Sheriff in Town
Posted: 4/17/2018

We refer – in our own inimitable way – to the new Director of the United States Patent and Trademark Office (USPTO), Andrei Iancu. Mr. Iancu was nominated by President Trump and was unanimously confirmed by the U.S. Senate, putting him in charge of 12,000 employees and a $3 billion annual budget.

Mr. Iancu comes from the Irell & Manella law firm. He also taught at the UCLA School of Law and began his career in the trenches as an engineer at Hughes Aircraft. He is generally considered to be pro-innovation, pro-inventor and pro-strong patents. He recently gave the Keynote Address at the U.S. Chamber of Commerce Patent Policy Conference on April 11. Here are a few key quotes from his talk.

“Yet today, our patent system is at a crossroads. For more than just a few years, our system has been pushed and pulled, poked and prodded. The cumulative result is a system in which the patent grant is less reliable today than it should be. This onslaught has come from all directions. There has been major reform legislation, and proposed legislation. There have been massive changes brought about by major court cases. And the USPTO itself has taken a variety of actions in an effort to implement these changes. Plus, importantly, the rhetoric surrounding the patent system has focused relentlessly on certain faults in, or abuses of, the system—instead of the incredible benefits the system brings to our nation.

“I don’t need to tell this audience that the American patent system, which in prior years was deservedly ranked as the number one system in the world, in 2017 fell to number 10. And this year it fell further, tied for number 12. But make no mistake: we are still an elite system, a mere ¼ point away from the systems ranked 2 through 11. And the United States remains the leader for overall IP rights.

“Still, we are at an inflection point with respect to the patent system. As a nation, we cannot continue down the same path if we want to maintain our global economic leadership. And we will not continue down the same path. This administration has a mission to create sustained economic growth, and innovation and IP protection are key goals in support of that mission.

“First, we must change the dialogue surrounding patents. Words have meaning. Words impact perception and drive public policy. And for too long, the words surrounding our patent system have been overly-focused on its faults. A successful system cannot be defined by its faults. Rather, a successful system must be defined by its goals, aspirations, and successes. Obviously, errors in the system should be corrected. And no abuse should be tolerated. Errors and abuse should be identified and swiftly eliminated. However, the focus for discussion, and the focus for IP policy, must be on the positive. We must create a new narrative that defines the patent system by the brilliance of inventors, the excitement of invention, and the incredible benefits they bring to society. And it is these benefits that must drive our patent policies.

“…when we write, interpret, and administer patent laws, we must consistently ask ourselves ‘Are we helping these inventors?’ Whether it’s an individual tinkering in her garage, or a team at a large corporation, or a laboratory on a university campus, we must ask ourselves ‘Are we helping them? Are we incentivizing innovation?’

“And that brings me to my second principal point for today: increasing the reliability of the patent grant. Because that is key to incentivizing innovation…As I said at my Senate confirmation hearing: ‘When patent owners and the public have confidence in the patent grant, inventors are encouraged to invent, investments are made, companies grow, jobs are created, science and technology advance.’

“…our current law surrounding patentable subject matter has created a more unpredictable patent landscape that is hurting innovation and, consequently, investment and job creation. Recent cases from the Supreme Court – Mayo, Myriad, and Alice – have inserted standards into our interpretation of the statute that are difficult to follow. Lower courts applying these cases are struggling to issue consistent results. Patent lawyers trying to advise their clients are, in turn, struggling to predict the outcome with respect to certain patents. And examiners at the USPTO must spend increased amounts of time addressing this challenging issue. The current standards are difficult for all: stakeholders, courts, examiners, practitioners, and investors alike.

“If we want truly reliable rights, we must ensure that we issue appropriately-scoped patent claims from the get-go. In other words, we must also focus on the front end. And since our examiners are first in line, we must ensure that they have the tools they need for a thorough search and examination.

“Our examiners already do a fabulous job. And it is not easy, given the state of the law and all the information that needs to be processed and analyzed. To further improve the original examination, a next step would be to increase examiners’ ability to find the best prior art during examination. At times, there is a gap between the prior art found during initial examination and the prior art found during litigation. There are many reasons for this, but the main culprits are the ever-accelerating publication and accessibility explosions. These are issues that face every patent office around the world. Indeed, we are ahead of most others on this front. But if we could further narrow this gap in prior art between examination and litigation, then the accuracy of the patent grant – and therefore, its reliability – would increase.

“During his first address to Congress in February of last year, President Trump noted that, on our 100th anniversary in 1876, citizens from throughout the country came to Philadelphia to celebrate America’s centennial. At that celebration, the country’s inventors showed off their wonderful creations. Alexander Graham Bell presented his telephone for the first time. Remington revealed the first typewriter. And Thomas Edison showed an automatic telegraph and an electric pen.

“President Trump then asked all of us to imagine the wonders our country could know in America’s 250th year. He asked us to think about all the illnesses that could be cured, the distant worlds we could walk on, and the marvels we could achieve if only we could set free the dreams of Americans. That’s how I think about intellectual property. As I see it, no dream is too big if we unleash the power of innovation and give our nation’s inventors the protections they need to succeed. That’s why it’s so important that we find the right balance in the IP system. This is something I’m very passionate about, and fully committed to, as I lead the U.S. Patent and Trademark Office.”

We Add New Patent to Digital Currency/Cryptocurrency Section
Posted: 3/17/2018

The newest technology section in the Patent Marketplace at our website is for the newest currencies, and we add a second property to that section this month. We are particularly excited about the Digital Currency “Clicks” Technology portfolio. We must assume that everyone who has not been studying butterflies in the Amazon for the last twenty years knows that there is the “bricks” retail sector and there is the “clicks” retail sector. Some businesses have managed to establish successful footprints in both sectors.

This exciting portfolio of four U.S. Patents and a European Patent creates a whole new business. Merchant Services companies are those businesses that process debit and credit card transactions. They provide the means for retailers – both bricks and clicks – to accept plastic, get approval for the charge made to the card, and then get paid for the sale – less, of course, a processing fee for the Merchant Services company they use. Americans charge over $3 trillion (yes, Trillion with a “T”) on their debit and credit cards each year. Processing charges vary, but at just 2%, that makes Merchant Services a $60 Billion industry. Zowee!

Amazing as it may seem, none of the major Merchant Services players offer processing of digital currency transactions. The Digital Currency “Clicks” Transactions portfolio will enable the company that acquires it to offer Merchant Services to retailers so they can accept digital currencies in addition to debit and credit cards, and Paypal. And the company that invests in this technology will be patent-protected through 2032. Double Zowee!

It Had to Happen: The Bitcoin Patent Report
Posted: 3/17/2018

It was just a matter of time. An enterprising writer and entrepreneur, Anton Corbin, has launched the Bitcoin Patent Report. It includes the latest Bitcoin news, and it offers two reports: the Worldwide Patent Report on Bitcoin and Blockchain Technology and the Comprehensive US Patent Report. Each includes all the latest Bitcoin and Blockchain patents and patent applications. The U.S. report is just 0.05 Bitcoin. Yup. They do business in Bitcoin.

What you will find is that large numbers of banks and other financial institutions are filing for digital currency patents. There are, in fact, just a handful of cryptocurrency patents that are available for acquisition, and the few that are available are represented by IPOfferings. As long as the Bitcoin Patent Report stays in the reporting business (and not the patent brokerage business), we wish them well.

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