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The Turing Award – And Therein Lies a Tale
Posted: 4/19/2021

The Turing Award for 2021 has been awarded to Alfred Aho and Jeffrey Ullman for their work in computer languages. The Turing Award is named after Alan Turing, the brilliant British mathematician whose team created one of the first computers and used it to crack the coded messages sent by the Nazis using their Enigma machine.

Known as the “Nobel Prize” of the computer industry, it is given each year by the Association for Computing Machinery to those who are responsible for an innovation "of lasting and major technical importance to the computer field.” Messrs. Aho and Ullman met many years ago when they worked together at Bell Labs, and therein lies a tale that we shall share with you.

The story begins with the founding of Western Electric Manufacturing Company in 1869. It manufactured electrical products such as typewriters, alarms, and lighting products, and was closely aligned with the Western Union Telegraph Company, for which Western Electric supplied relays and other equipment. Western Union was the company that ran the U.S. telegraph system for over 100 years.

A decade later, U.S. Patent No. 174,465 was awarded to 29-year-old Alexander Graham Bell of Boston on March 7, 1876 for what was to become the telephone. Bell’s investor in his start-up business to produce and install telephones and provide telephone service was his father-in-law, Gardner Greene Hubbard, who formed the Bell Telephone Company in July 1877.

Bell and Hubbard set up a subsidiary, American Telephone & Telegraph Company, to handle long distance telephone services, but in 1899 they decided to make Bell Telephone a subsidiary of American Telephone and Telegraph. AT&T became THE U.S. telephone company for another 80 years, and came to be known as “Ma Bell.”

In 1879, Western Union and American Telephone and Telegraph were involved in a nasty patent infringement lawsuit – all great disputes are over a patent or a woman – and the suit was resolved when AT&T acquired Western Electric in 1881. For the next 100 years, Western Electric was the manufacturing subsidiary of AT&T. If you ever see an old black dial telephone at a flea market or in an antique store, turn it over and you will see that it was manufactured by Western Electric.

As the manufacturing business of the telephone industry, Western Electric needed to be on the cutting edge of technology, so on January 1, 1925, Bell Telephone Laboratories, Inc. was formed, and into this new company was combined all the engineering, development, and design departments of AT&T and Western Electric. Bell Labs – as came to be known – hit the ground running with 3,600 employees housed in 4,000 square feet at 463 West Street in Manhattan.

Bell Labs became one of the most prolific invention machines in history, having received 30,000 patents to date. Bell Labs invented everything from talking pictures to the transistor. Bell Labs invented the photovoltaic cell (or solar panel), the laser, radio astronomy, fiber optics, the UNIX operating system, and the picturephone – 50 years before Zoom! It was at Bell Labs that the 2021 Turing Award winners. Alfred Aho and Jeffrey Ullman, met and worked and became colleagues.

When AT&T was broken up in 1984 into regional operating companies and a long-distance telephone provider, Bell Labs became AT&T Bell Laboratories, a subsidiary of the long-distance company. In 1996, AT&T Bell Labs and Western Electric were spun off into a separate company, Lucent Technologies, Inc., but a small number of researchers were kept on staff by AT&T as A&T Labs.

In 2006, Lucent merged with French telecom manufacturer Alcatel to form Lucent-Alcatel, S.A.

In 2016, Nokia Corporation, the Finnish multinational telecommunications giant, acquired Lucent-Alcatel and established Nokia Bell Labs, the current successor to this storied American institution.


Are You Reporting All Your Assets?
Posted: 3/15/2021

We are often asked by our clients who have chosen IPOfferings to represent them in the monetization of their patents what value we should put on their patents. IPOfferings provides not one, but three, separate Patent Valuation Services, but we do not go through the process of performing a formal patent valuation – unless the clients engages us to do so – because it is a buyer’s market, and the buyer sets the price. Not all patent brokers will admit it, but that is the reality today.

There are times, however, when performing a patent valuation makes a lot of sense. In fact, there are times when a patent valuation is a critical event that should not be avoided. When a company has home-grown patents – patents that it did not acquire, but patents it applied for itself – it is critically important that a business know what those patents are worth. To see why, follow along with us on this adventure.

A business comes up with a new technology. It’s CTO (chief technology officer), its VP of Engineering, its Marketing Director, or any other employee at the company from the executive suite to the loading dock, comes up with an invention that the company could develop into a new product or use to improve or enhance a current product. What does a smart company do? It files a patent application for the new technology.

It probably engages a patent attorney to file the application, and two or three years later – current patent pendency at the USPTO is 23 months, but it was recently as high as three years – a patent is granted. Congratulations. But here is what does not occur: There is NO accounting transaction that records the acquisition of that patent.

When a company buys a truck, or a lathe, or shelving for the warehouse, or computers, or any other capital equipment, an accounting transaction occurs that takes funds out of Cash and adds the value of the acquired truck, lathe, shelving, or computers to the Equipment line under Property and Equipment. So as a company builds its assets, they automatically appear on the left side of the Balance Sheet.

If a company buys a patent – we hope it buys the patent through IPOfferings from one of our clients – an accounting transaction occurs that takes the funds out of Cash and records the value of the acquired patent under Intangible Assets.

But – and this is a very common but – when a company does what we covered back in the third paragraph (go back and read it if you need to), there is NO accounting transaction. The filing fees and attorney fees for the patent application are not assets. They are expenses that are properly written off in the year they are expended. So, when that patent is granted, it is most definitely an asset, but not one that appears on the company Balance Sheet automatically as other assets do.

We come across companies all the time in all industries that have from a handful to dozens of active, granted patents that are not accounted for on the company’s Balance Sheet!

Why is it important for a company to record its patents as assets? Because adding the value of its patents – and other intangible assets – to the Balance Sheet increases the company’s value. And a company with greater value has easier access to financing. It is much easier for a start-up business to raise venture capital or other financing if the value of its patents are reflected on its Balance Sheet. Adding the value of its patents to the Balance Sheet of a publicly held company can do wonders for the company’s stock price. And let’s face it, any company’s Balance Sheet should accurately reflect all of a company’s assets as well as its liabilities.

If you represent a company that has home-grown patents, and those patents are not reflected on your Balance Sheet, the time has come to have a professional valuation of those patents performed so their value can be accurately reflected on the company Balance Sheet.


Alec Schibanoff Will Be Speaker at the 2021 World IP Forum
Posted: 2/16/2021

The World IP Forum is a prestigious annual conference that addresses all aspects of intellectual property. It is held at a different location each year. It attracts attendees from the IP community, industry, academia, and government, and features speakers from the IP community, industry, academia, and government. There will be speakers from many of the national patent-granting agencies around the globe, major corporations, universities, national court systems, IP law firms, and professional IP services providers.

Our very own Alec Schibanoff will be one of the speakers, offering a presentation on Patent Triage. The 2021 World IP Forum will be April 26-28, and this year’s conference will be a virtual event.

We Thank Andrei Iancu for His Service
Posted: 2/16/2021

President Trump’s appointee to run the Patent Office was Andrei Iancu. As most of you know, the Director of the U.S. Patent and Trademark Office is also the Under-Secretary of Commerce for Intellectual Property and a presidential appointee. So, Mr. Iancu’s stint at the USPTO ended January 20 as did the service of all other cabinet officers and presidential appointees, except for a small number that were asked to stay on temporarily by the new administration.

Iancu came to the U.S. from Romania, and holds a BS in Aerospace Engineering, an MS in Mechanical Engineering, and a Juris Doctorate – all from UCLA. He worked in industry – four years at Hughes Aircraft – and in legal practice – 13 years at Irell & Manella. In addition to having movie-star good looks and a world-class personality, he did a pretty good job at the Patent Office. Among his accomplishments was reducing total pendency (the time it takes from when a patent application is filed until it is either granted as a patent or it receives a final rejection) down to an average of just 23 months. Bravo!

It is unclear where Iancu will go, but wherever it is, he will be brilliant. He is just that kind of guy. Until a new Under Secretary of Commerce for Intellectual Property is nominated and confirmed by the Senate, the Acting Director of the USPTO is Drew Hirshfield, the Commission of Patents and a career USPTO employee. We take this opportunity to thank Andrei Iancu for his service to the patent community and to his country.

100 Top Patent Recipients for 2020
Posted: 2/16/2021

Each year, Harrity Patent Analytics compiles its PATENT 300 – the 300 largest recipients of U.S. Utility Patents. You can visit the Harrity website for the full list of 300 and all the excellent analysis they provide. Here are the Top 100.

1. IBM 9,435
2. Samsung 8,539
3. LG 5,112
4. Canon 3,689
5. Intel 3,284
6. Raytheon 3,213
7. Huawei 3,178
8. Microsoft 2,972
9. Taiwan Semiconductor 2,892
10. Sony 2,886
11. Apple 2,840
12. Dell 2,826
13. Toyota 2,819
14. GE 2,417
15. Alphabet 2,379
16. Amazon.Com 2,373
17. Qualcomm 2,297
18. BOE 2,157
19. Ford 2,090
20. Panasonic 1,929
21. Hyundai 1,626
22. Micron Technology 1,535
23. Facebook 1,527
24. Johnson & Johnson 1,492
25. Hitachi 1,472
26. Boeing 1,464
27. AT&T 1,459
28. Medtronic 1,440
29. Ericsson 1,401
30. Fujifilm 1,399
31. Siemens 1,341
32. Epson 1,335
33. Mitsubishi 1,319
34. Toshiba 1,314
35. Honda 1,219
36. Denso 1,214
37. Honeywell 1,178
38. Texas Instruments 1,150
39. Cisco 1,141
40. US Federal Government 1,108
41. Robert Bosch 1,100
42. Fujitsu 1,093
43. SK Group 1,091
44. Sharp 1,052
45. NEC 1,007
46. HP 989
47. Kyocera 978
48. Philips 949
49. Ricoh 938
50. Murata 892
51. TCL 880
52. Infineon 834
53. HPE 831
54. GM 802
55. Western Digital 788
56. Oracle 783
57. Halliburton 778
58. Nokia 757
59. Kioxia 756
60. Capital One 747
61. Sumitomo 740
62. Applied Materials 738
63. SAP 737
64. Alibaba 721
65. Softbank 720
66. Brother 713
67. Verizon 712
68. Bayer 706
69. University of California 687
70. Saudi Arabian Oil 683
71. 3M 668
72. Porsche 658
73. NXP Semiconductors 649
74. STSMicroelectronics 646
75. Olympus Corporation 643
76. Safran 641
77. Procter & Gamble 640
78. Fanuc 634
79. Schlumberger 633
80. Lenovo 630
81. Tencent 623
82. Boston Scientific 605
83. Konica Minolta 587
84. Japan Display 580
85. TDK 578
86. Baker Hughes 572
87. Mubadala 571
88. BBK Electronics 564
89. Airbus 560
90. Semiconductor Energy Lab 556
91. Rolls-Royce Group 553
92. Commscope 550
93. Mitsubishi 530
94. Salesforce.Com 525
95. BASF 517
96. ETRI 499
97. Tokyo Electron 498
98. Continental 495
99. Adobe 490
100. Corning 488


A few clarifications and observations:
No.1, IBM, has led this list for as long as anyone can remember.
No. 46 (HP) is Hewlett-Packard, Inc., the PC and printer manufacturer.
No. 63 (HPE) is Hewlett-Packard Enterprises, the server, networking, consulting, and support services business.
No. 26, Boeing, received 1,464 U.S. Patents while its direct competitor, No. 89, Airbus, received only 560.
No. 60, Capital One, is the only bank in the list.

We Need to Get This Off Our Collective Chests
Posted: 1/18/2021

We keep a list of what we call Annoying Errors. These are errors – usually in grammar – that we see people make over and over. What does this have to do with patents, patent brokerage, and patent-related services? We will feel better when we get it off our chests. That’s what. So here goes.

♦ Reflexive Pronouns: These have to be the most-often misused forms of speech in the American language. What is wrong with this sentence? “Jeff, Sally, and myself were responsible for filing the patent application.” It hurts just to read the sentence. “Myself” is a reflexive pronoun, so it should never appear as the subject of a sentence. The correct sentence is “Jeff, Sally, and I were responsible for filing the patent application.” What is wrong with this sentence? “It is better to leave these things to myself.” Again, we cringe as we read this. A reflexive pronoun is never the direct object of a sentence. The correct sentence is “It is better to leave these things to me.”

A reflexive pronoun “reflects” back on the subject of the sentence, so “myself” is never used unless the subject of the sentence is “I”. For example, “I cut myself shaving.” or “They can handle that themselves.” A reflective pronoun (myself, ourselves, yourself, yourselves, himself, herself, itself, and themselves) is never the subject of a sentence and is only used when it reflects back on the subject (I, we, you, he, she, it, or they).

Patent Triage includes the evaluation, patent-by-patent, of the entire collection of assets, and putting each patent into one of five categories.

♦ Farther and Further: Farther is the superior form of “far”. Example: “I used to live in the far house, but then we moved down the road to the farther house. I hope to one day live in that beautiful house that is farthest down the road.” Far. Farther. Farthest. Get it? You use “farther” when you could also use “far” or “farthest”. The Ford Motor Company tagline “Go Further” is grammatically wrong. Great cars and truck. Bad tagline. Should be “Go Farther”. Go far. Gar farther. Go the farthest.

Further is a verb and means to advance or promote. Example: “A good education will further your career.” “I do not want to go any further with this.” Wrong. “You do not want to go any farther.” With that or anything else. Got it?

♦ Irrespective and Irregardless: “Respective” and “irrespective” are wonderful and useful words. “Based on our guidelines, we will take the respective actions.” Or “Irrespective of your request, we will not close early on Friday.”

“Irregardless” is NOT a word. “Regardless” means without any concern as to what others say or do. “We shall act regardless of any actions on your part.” Great word. So what could “irregardless” possibly mean?

♦ Perrogative: This is our biggest pet peeve, and we hear it this non-word all the time and even see it in print, even though the spell checker had to have flagged it when it was first entered into the document. “It is my perrogative, so I shall proceed as I wish.” Really? The word is “prerogative” and it is pronounced “pree rog uh tiv”. Not “per rog uh tiv”. Prerogative. Please….

To those of you who thought you caught an error in the first paragraph, we purposely use the term the “American” language. English is what they speak in England, and it is charming and wonderful to listen to. We are not alone in this belief. In fact, Websters – THE authority on dictionaries – calls its lexicon “Webster's New World Dictionary of the American Language”. Hah!

Now we really feel better! Our best wishes to all for a healthy and prosperous 2021!

Is It Time for a Serious Evaluation of Your Patent Assets?
Posted: 12/12/2020

While we are on the topic of what is or is not a good time for something, here is a subject that every business or university that owns patents – as well as any prolific inventor with an inventory of patents – needs to consider. Year ends are always a good time to look back, reflect, analyze, consider, and strategize.

A question that every owner of multiple patents should consider is: What is the best course of action in 2021 and beyond for each of the patents it owns? The way to start that process is with what is called “Patent Triage.” The term “triage” is most often used in medical scenarios. When there is a disaster with multiple injuries, the injured are brought to a medical facility and they are immediately triaged. They are evaluated using medical community standards to determine who needs critical care, who needs intense care such as surgery, who can wait for treatment, and who really needs to be sent home. The key, of course, is to save lives by making sure the most seriously injured are treated first.

While no one usually dies in the process, Patent Triage is a patent-by-patent evaluation of a company’s or a university’s or an inventor’s patents to classify each one, and from that evaluation have a strategy for that asset. Once classified, the smartest course of action for each patent becomes clear. For those who cannot see the patent forest for the patent trees, the solution is to totally avoid the forest, and look at each individual patent.

Patent Triage includes the evaluation, patent-by-patent, of the entire collection of assets, and putting each patent into one of five categories.

♦ Core Patent: These are patents that a company is practicing in the products or services that it sells, they are essential to the enterprise, and they should be professionally appraised – if they have not been – to determine their value so that value is reflected in the company’s Balance Sheet. Universities and inventors do not have Core Patents, only businesses.

♦ Assertion Asset: These are patents that appear to be infringed – with “appear” being the key element here. There are several indicators that a patent can have that it is being infringed – the number of Forward Citations is just one. These patents need to be further studied in a second process to determine if there is infringement, who the infringers are, and – if appropriate – to document that infringement with Claim Charts. An infringed patent – based on who the infringer is – can be a patent that has considerable under-utilized value, and that value can be realized using a few different strategies. A patent can be both Core and Assertion – and often is, and the infringer is a competitor of the patent owner.

♦ Licensing Candidate: This is a patent that has the potential to generate royalties, but may not be because all the prospective licensees are direct competitors of the assignee, and the patent owner does not want to created competition for its patented product. And while that makes sense, it is not always the case that it will create new competition. There are instances in which a patent can be licensed to companies that are in concentric businesses – enterprises that have related, but not directly competing products – to the patent owner's business. One of the most attractive aspects of a Licensing Candidate is that it can generate income with no Cost of Good Sold! A patent can be Core and/or Assertion and/or Licensing.

♦ Divestiture Patent: This is a non-core patent – a patent that covers a technology that the patent owner is not practicing – that is likely to have little real value for the business. Divestiture Patents should be referred to a patent broker to see if they can be turned into cash. It is not uncommon for a company to file for a patent on a new technology, but for one of several reasons – from lack of marketing to bad timing to too high an investment to distribution or packaging issues – the business never commercialized the patented invention. A Divestiture Patent might also be a Licensing Candidate, but it is definitely not a Core Patent and not an Assertion Asset.

♦ Non-Core Patent: When a business believes it has a new technology within its grasp, it should always file for a patent for that invention. Better to have a patent for an invention you do not practice than not have a patent for a technology that you do practice! The result of this activity – an activity we strongly endorse – is that sometimes a company ends up with a patent that is simply not core to its business, but it is not a patent with licensing or sale potential. For example, the technology covered by the patent was cutting edge when the patent application was filed, but just a few years later – when the patent was granted – the invention is no longer practical, or other technologies have replaced it, or the market has gone elsewhere. A good example of this are the electronic typewriters that hit the market in 1980 and 1981. They were a great idea in their heyday, but the PC made electronic typewriters obsolete by 1983. It is not even worth paying the maintenance fees on the Non-Core Patents, and they should be abandoned. Needless to say, those patents that are triaged as “Non-Core” do not fall into any of the other categories.

Every business, every university, and every inventor needs to know what’s in the warehouse, especially when that warehouse is full of patents.

More Advice for Every Inventor
Posted: 11/12/2020

Last month, in Advice for Every Inventor, we provided valuable – yet free – advice for every inventor with a patent about to be granted. If you missed the article, or you want to read it again, or send it to someone who needs to read it, it is posted down below.

As we promised in last month’s Patent Leather, we share with you this month yet another way to add sales appeal and value to your next patent. It is no surprise to anyone that we compete today in a global economy. That point was illustrated in The World Is Flat by economist Thomas Friedman. The book came out back in 2005, but the lessons in the book are still valid. Friedman illustrated how any business anywhere in the world can effectively compete against all other businesses across the globe. With this in mind, how does an inventor compete in a global marketplace – and make his or her patent more appealing and more valuable in the process?

The acquirer of your U.S. Patent is very likely a multinational enterprise that manufactures and sells products in many countries. The company that is buying your patent for patent protection in the U.S. will very likely also want patent protection in Europe and Asia where many U.S. companies also do considerable business.

That means that in addition to filing for a continuation, also file for a PCT Patent Application. If you are not familiar with it, the PCT (Patent Cooperation Treaty) is an agreement between most of the nations of the world to cooperate in the granting of national patents. Filing a PCT Patent Application based on your soon-to-be granted U.S. patent gives you a global priority date for your patent, and it considerably speeds up the time it takes to secure patents in other countries.

Let us take a minute to clarify something. We get emails from inventors every day – and we mean “every day” – who filed a PCT Patent Application and believe that they now have a “global” patent. A PCT Patent Application is NOT a patent. It is simply an application that can be used to secure patents from the 153 nations that are signatories to the agreement. Each national patent office needs to individually review your patent application and either approve the application and grant a patent, or reject the application based on that country’s patent laws – and they can differ considerably from nation to nation – and what other patents may have already been granted in that country, as well as other legal and regulatory factors.

But filing a PCT Patent Application gives the acquirer of your patent-and-PCT-Patent-Application portfolio a distinct advantage if that company decides to sell a product based on your patent in other countries – a very likely outcome in today’s global economy. Filing for a PCT Patent Application is another of those Low Risk/High Reward propositions we promote.

If the acquirer of your U.S. Patent and PCT Patent Application does not need a patent in another country, the company just lets the PCT Patent Application expire. No harm. No foul.

So – to increase the appeal and value of your soon-to-be-granted patent, there are two very important extra steps to consider:
  1. File for a continuation
  2. File a PCT Patent Application
A portfolio consisting of a granted U.S. Patent, a continuation application from that granted patent, and a PCT Patent Application, is a portfolio with both downstream and international appeal, and it is absolutely more valuable than a solo U.S. Patent! Absolutely!

Advice for Every Inventor
Posted: 10/13/2020

We return to this topic at least once a year because it is critical to the successful commercialization of U.S. Patents, especially recently granted U.S. Patents that are going to be monetized and not practiced by the inventor and assignee.

Among all asset classes, patents are unique because they are the one asset that you cannot buy and then modify to your exact needs. Take real estate, another asset class, as an example. You can buy a building that once housed a factory and turn it into a warehouse – or vice versa. Or…you can apply for a zoning variance and turn that old factory into an office building. Or even an apartment house. Even a nursing home or extended care facility. You could knock out big chucks of the front wall of the building, put in windows, and turn that old factory into a retail location – a store or restaurant. The possibilities are almost endless. In the Northeast where we are located, it is fashionable to buy a barn and turn it into a house. Or buy a warehouse or factory building and turn it into lofts. You get the idea.

Alas, the same is not true of patents. The red meat of a patent is its claims. And what is in the claims in the granted patent is what a business receives when it buys or licenses that patent. Wouldn’t it be great if a business could buy a patent, and then tweak the invention covered by that patent to the exact needs of that company? Alas, to dream, but it is not possible.

But wait a minute. There actually is a way to do that! It is called a continuation. When a patent application is approved – the Patent Office term is “allowed” – that is time for the inventor and his or her patent attorney to file for a continuation. There are continuations, divisionals, and continuations-in-part, and your patent attorney can describe the differences between them and which is most appropriate to your patent.

When you file a continuation, you create a patent application that includes the claims from the first patent along with the Priority Date of the first patent. When you go to market with a granted patent and a continuation patent application based on that patent, you create a portfolio that is a much more attractive and valuable asset than just the initial granted patent.

What the acquirer of the patent-and-continuation can do is use the continuation to tweak the invention in the original patent. For example, a patent covering a medical device for humans can be supplemented by a patent that covers animals. A patent that includes a visual and audio warning device can be supplemented with a second patent that calls a specified phone number or communicates via Bluetooth. A patent covering industrial equipment can be supplemented by a second patent that covers household appliances. The possibilities are quite literally endless!

Here is the other benefit of filing a continuation. One morning you are going to wake up at 3:00 am and ask yourself why you did not include one more feature in your recently granted patent? But wait, you can. Use the continuation to add that feature. Now you have an even more comprehensive patented invention.

But – before that second patent is granted – be sure to do what? File for a continuation!

What if you and the buyer of your patent never need the continuation? You just let it lapse. No harm. No foul. We are believers in High Reward/Low Risk ventures, and filing for a continuation before your next patent issues is clearly High Reward and Low Risk (and low cost). It creates a portfolio that is more appealing and more valuable than just the solo granted patent.

While this advice has been given from the aspect of the independent inventor, it clearly applies to any organization – such as a business or university – that is filing a patent for an invention. Filing a continuation gives the organization the ability to build on the basic invention covered in the initial patent and create a downstream – or several downstream – second or third-generation patents that share the Priority Data – always a critical factor – from the initial patent.

Why Is the Selling Cycle So Long?
Posted: 9/18/2020

Patents are acquired for several reasons. Some are acquired as assertion candidates. Some are acquired to give a company patent protection – or additional patent protection – for its products and services. Some are acquired by a company simply so one of its competitors does not buy it!

But most patents are acquired with the goal of commercializing the invention covered by that patent. The acquirer will use the patented technology to either develop a new product or a new service, or to enhance, improve or expand the performance and capabilities of a current product or service. And making that decision is a complex one. And one that takes time.

When a business acquires a patent with the goal of commercializing the invention covered by that patent (or patent portfolio), the company is not simply looking at the cost of the patent. In fact, the cost of acquiring the patent is often only a fraction of the total cost of developing and bringing to market a new product or a new service based on that patent.

Going from patent to new product is not an inexpensive, simple, quick task. It is, in fact, an expensive, complex, lengthy task. The new product has to be designed, engineered, and manufactured, and where it will be manufactured or assembled has to be determined. Parts for it have to be sourced. Prototypes may have to be made that can be tested, either for performance or for market research. The product will need packaging. It may need branding and the filing of a trademark or service mark application. It may need approvals such as UL or CE certification, or permits or licenses.

Then there is the marketing required to put the product in front of buyers. If it will be sold through retail channels, the manufacturer may need to negotiate for shelf space. A warranty, service and repair program needs to be set up. What additional staffing will be needed in all of these areas to produce, deliver, and support this new product? If it is a software program or a service, there is no traditional manufacturing, but there is still the entire product development continuum, and an infrastructure will need to be created to deliver the software or service – and get paid for it.

As you can see, virtually every department and business unit of the company acquiring a patent is involved in the commercialization of that patent, and in the decision to acquire it. This is why we tell our clients that it typically takes three to nine months to close a deal for the sale of a patent to an operating company. We wish it were shorter, but it is not.

It takes nine months to make a baby. It would be great if we could recruit three women and do it in three months – or nine women and do it in just a month – but that is not reality. And it takes time to put a patent in front of the right people at the right company and let that business make the collective decision to acquire and commercialize that patent.

Of Sheaves and Reapers and Patents and Marketing and Politics and War
Posted: 6/20/2020

“Those who go out weeping, carrying seed to sow, will return with songs of joy, carrying sheaves with them.” -Psalm 126:6

Our story starts with sheaves. Since men began planting crops thousands of years ago, farm workers toiled in the fields to bring in the grain harvest. They had to bend over to cut the stalks of wheat – truly back-breaking work – and then tie the stalks of wheat into sheaves. The sheaves were taken to a threshing floor or threshing barn where the wheat would be separated from the chaff.

Cyrus McCormick is credited with mechanizing the process of bringing in the grain crop by inventing the first mechanized reaper. He was granted a U.S. Patent for “Improvement in Machines for Reaping Small Grain” in 1834. It was a horse-drawn contraption that mechanically cut the grain from the forward motion of the device. When demand for the product exceeded McCormick’s ability to build them in his home state of Virginia, he relocated to Chicago and set up a factory to sell his new “McCormick Reaper” to farmers across the U.S.

McCormick had a competitor, one John Henry Manny of Rockford, Illinois, who showed up at the Paris Exposition in 1855 with his version of the reaper that just about everyone agreed ran circles around McCormick’s product. McCormick returned to the U.S. from Paris with a tarnished reputation and promptly sued Manny for patent infringement, demanding that Manny cease production of his reapers and pay McCormick $400,000 – a considerable sum in 19th Century currency – for his infringement.

The case went to trial in September of 1855 – you could get a trial date fairly promptly back then – and it featured prominent attorneys on both sides. McCormick hired a litigator – former U.S. Attorney General Reverdy Johnson – and an IP expert – New York patent attorney Edward Nicholl Dickerson.

The defendant was represented by attorneys George Harding and Edwin M. Stanton. If that name rings a bell, you probably aced American History back in high school. Because the trial was to take place in Illinois, the defendants needed a member of the Illinois Bar as their attorney-of-record, so they hired a young, lanky fellow from Springfield, one Abraham Lincoln.

McCormick lost the case, but not the war. While he probably did not have a superior reaper, he made continual improvements to the product, and his marketing was far superior to his competitors, so he made millions selling the McCormick Reaper. In 1856, McCormick’s factory cranked out more than 4,000 units! In 1871, the McCormick factory was a victim of the famous Chicago Fire and was burned to the ground, but McCormick rebuilt. Over the following years, the reaper was expanded to become a reaper/baler that also baled the sheaves and eventually became known as the “McCormick Harvester.”

McCormick’s harvester and his company grew to become International Harvester, a multinational manufacturer of farming equipment and trucks that is known today as Navistar International.

So whatever happened to that Lincoln fellow? He was elected the first Republican President in 1860, and he was so impressed with Edwin M. Stanton from the patent infringement trial five years earlier that he asked Stanton to serve as his Secretary of War. As a result of the loss of their patent infringement claim, the McCormicks were lifelong Democrats.

Of Sewing Machines and a Patent Thicket and a Patent Pool and Consumer Finance
Posted: 6/20/2020

It’s JEOPARDY! and the answer is: “He invented the sewing machine.” If you answered “Who is Singer?” you would be wrong. The correct response would be “Who is Howe?” “Who is Elias Howe?” if you want to be a Ken Jennings-type show-off.

Elias Howe received a U.S. Patent for a “Sewing Machine” in 1846. Isaac Singer did not receive his U.S. Patent for a “Sewing Machine” until 1851. Yet Singer is still in business today – 120 years later – while no one (except the fortunate readers of this column) ever heard of Elias Howe. And therein, as they say, lies a tale.

Several manufacturers of sewing machines popped up in the 1850s. Using a sewing machine compared to hand-stitching a garment was a no-brainer. Every housewife in America wanted one, as did all the companies that made ready-to-wear clothing. So Elias Howe began licensing his patent at exorbitant fees to anyone and everyone trying to build and sell anything similar to a sewing machine.

Meanwhile Isaac Singer – an eccentric, an entrepreneur, a sometimes actor, and the father of two dozen children from different women – took Howe’s invention to the next level by adding a thread controller and combining a vertical needle with a horizontal sewing surface. And Singer started licensing his sewing machine patent.

But it wasn’t just Howe and Singer. There were other sewing machine patent holders licensing their patents, creating what has come to be known as a “patent thicket” – a situation in which a number of parties can lay claim to different key elements of the same basic invention. It sparked what is known in patent lore as the “Sewing Machine War.”

Order was formed out of chaos when one Orlando Brunson Potter, a lawyer and the president of the Grover and Baker Sewing Machine Company, proposed an unprecedented concept. The various patent owners should merge their business interests and charge a single patent licensing fee. This created what is known as a “patent pool.” Nine patents were rolled into the “Sewing Machine Combination” with each of the patentees earning a share of the licensing fees collected from every sewing machine manufacturer.

How did Singer rise from all of these companies and become the dominant player for the next century? It really had nothing to do with Isaac Singer who was not a very smart businessman. It was really Edward Clark, an attorney who was a partner of Singer and who took over management of the company and decided to invest in some marketing. Clark also came up with the “hire-purchase plan” for customers who could not afford to pay cash for a sewing machine. They could make a small down payment and then pay off the balance in installments – the first consumer installment payment plan in the United States!

What did Clark do with the profits? He bought up all of his competitors and built a corporate headquarters building in Manhattan that was for a few years the tallest building in the world.



The IP Community Has an Ally in Neil Gorsuch!
Posted: 5/18/2020

U.S. Supreme Court Associate Justice Neil Gorsuch wrote the dissent in the Thryv, Inc. v. Clicl-to-Call, Tech, LP case that was recently decided by the U.S. Supreme Court. In the dissent, Justice Gorsuch provided a refreshingly compelling defense of patent rights, defending a patentee’s right to obtain judicial review of rulings from the Patent Trial and Appeal Board.

Justice Gorsuch was able to secure support for his view from just one other justice on the court, Associate Justice Sonia Sotomayer. What strikes us as most curious here is that a justice appointed by conservative Republican President Donald Trump joined forces with a justice appointed by liberal Democrat President Barack Obama on the issue of inventor rights!

For all the details about the court decision and some excellent analysis, please read “Justice Gorsuch Champions Patent Rights in Recent Dissent” that appeared in the April 22 IPWatchdog.

Why Put a Value on a Patent or Portfolio?
Posted: 5/18/2020

We wrote last month about why patents from smaller countries have little value. So picking up on the value theme, we address this month why one would want to spend money for a professional valuation of a patent, patent family or patent portfolio. There are several reasons.

First of all, most patents that are assigned to businesses do not appear as an asset on the Balance Sheets of the companies that own them! Not surprisingly, many business owners and executives are shocked when they learn this. The reason is that patents do not come into existence as other corporate assets do.

A business buys a truck. The expenditure for the truck is an expense on the Profit-and-Loss Statement that becomes an asset on the company’s Balance Sheet. But when a company applies for a patent, the application and prosecution fees are written off as an expense in the years they are expended. When the patent is granted – two to three years later – no accounting transaction occurs like a check being issued to pay for the afore-referenced truck.

A beautiful patent with a gold crest and red ribbon arrives. It is either framed and hung on the wall or it is put in a file cabinet. What does NOT occur is any kind of accounting transaction that makes the patent appear as an asset on the company Balance Sheet.

In such cases, the company should have a Patent Valuation performed for all of its granted patents and then use those Valuations to document each patent’s value so they can be added to the Balance Sheet under Intangible Assets. This also applies to trademarks and service marks. Adding unrecorded patents to a business’s Balance Sheet can add hundreds of thousands – even millions – of dollars of new assets to a business’s net worth, dramatically improving a business’s debt-to-equity ratio. And that can both improve the ability of the business to secure financing and reduce the cost of borrowing! If it is a publicly traded company, it should have a positive effect on the stock price.

If you are an inventor with a patent or patents, you can have them appraised and list them as assets when, for example, you apply for a mortgage. Finally, if you are looking to sell or license your patent or portfolio, a professional valuation of your IP can give you an understanding of what it might sell for. Additionally, when a couple divorces, both may be required to report on their assets. We provided many valuations over the years for inventors in the midst of a split with their spouses. To learn more about the three Patent Valuation Services we offer, visit the Patent Valuation page at our website.

What Determines the Value of a National Patent?
Posted: 4/15/2020

We have the same conversation – either by telephone or via email – just about every day. We get calls and emails from inventors and business executives around the world who contact us about their non-U.S. patents only to learn that their patents have essentially NO commercial value. And they are aghast!

So let’s back up and look at some hard numbers. The U.S. enjoys the largest economy in the world. In 2019, the United States – according to the IMF (International Monetary Fund) – generated just over $21 trillion in revenue. That’s $21 trillion in sales of goods and services – what the economists call GDP (Gross Domestic Product). The value of everything sold by all the businesses, not-for-profit organizations and government agencies in the U.S. – from automobiles to Alka Seltzer – food and drugs – clothing and toys – you name it. Every product and service including getting your teeth cleaned at the dentist and registering your car at Motor Vehicles.

Here is the list from the IMF of the countries in the world by their 2019 GDP that generated over $1 trillion in national revenue. This chart is in millions, so add six more zeros (“000,000”) at the end.

United States $21,439,453
China $14,140,163
Japan $5,154,475
Germany $3,863,344
India $2,935,570
UK $2,743,586
France $2,707,074
Italy $1,988,636
Brazil $1,847,020
Canada $1,730,914
Russia $1,637,892
South Korea $1,629,532
Spain $1,397,870
Australia $1,376,255
Mexico $1,274,175
Indonesia $1,111,713
As you can see, only the U.S. and China have over $10 trillion in national revenue. There are just five countries with $2 to $5 trillion in GPD, and only nine countries with between $1 and $2 trillion. All the other nations in the world generate less than $1 trillion in national revenue – not much in today’s world.

What does this have to do with patents? Simply this: A U.S. Patent has considerable value simply because the U.S. is the largest economy with the largest potential for sales of a product based on that U.S. Patent. A U.S. Patent enables you to produce and sell a product in the largest economy in the world – and sue any business that infringes your patent for reasonable royalties and lost profits, seek injunctive relief, and generate negative press coverage for the infringer.

Following that thinking, a Greek Patent has relatively little value because it only gives you patent protection in a relatively small country that generated just $214 billion in national revenue and ranked No. 50 out of 186 countries. Any company anywhere in the world – except Greece – can manufacture a product that infringes your Greek Patent and sell that product anywhere in the world – except Greece – in blatant infringement of your Greek Patent. And you can do NOTHING about it!

Now it is possible that a company could infringe a U.S. Patent, but by manufacturing the product outside of the U.S. and purposely selling the product exclusively outside of the U.S. it would avoid being pursued by the U.S. Patent owner. Yes, this is possible, but it is not practical. The U.S. is one fourth of the global economy. Bypassing sales in the U.S. deprives the infringer of one-fourth of the sales it could generate had it purchased or licensed that U.S. Patent. But virtually any company can be very successful manufacturing and selling a product in 185 nations around the world, but not Greece.

That is why we find ourselves telling owners of Portuguese and Peruvian and Phillipine Patents that their patents just simply do not have any commercial value. It makes more sense to infringe the patent and manufacture and sell a product based on that patent outside of the country where the patent was granted than to buy or license the patent in the first place.

This is not because we are a bunch of Ugly Americans. The Ugly American was a novel published in 1958 about America’s diplomatic failures in Southeast Asia. The title of the book came to be the term used to describe Americans who think the sun rises the sets on the U.S. to the exclusion of the rest of the world. Yes, the staff at IPOfferings are all Americans who love and are proud of our country, but the value we place on U.S. Patents versus patents from relatively small countries is not because we are blind to the rest of the world. It is a simple matter of economics and cold, hard numbers.

The lesson for all readers of this column is this: If you are applying for a U.S. Patent, consider also applying for a Chinese, Japanese and European Patent as it will give your patent significantly more economic value. Why do we recommend a Chinese, Japanese and European Patent instead of a Chinese, Japanese and German Patent? Because applying for a German Patent is about the same amount of work as applying for a European Patent, and with your European Patent Application you can specify three nations, so select Germany (the fourth largest economy), the UK (the sixth largest economy) and France (the seventh largest economy).

If you are filing for a non-U.S. Patent, file a PCT Patent Application and use it to secure additional patents in countries with large economies. We have nothing against Turkey or Taiwan or Thailand, but they are just not large economies. A single patent from the UK or Canada or Australia – all companies in the Top 16 – still has limited value without a U.S. Patent to give the invention patent protection in the largest economy.

We live in a flat world. We are referring to the term created by Thomas Friedman in his 2005 best-seller, The World Is Flat. The book did not attempt to prove that Christopher Columbus was wrong and his ships would fall off the end, but that any business anywhere in the world can now compete with any other business anywhere in the world. Friedman’s reference to the world being “flat” was that today’s global economy is a level playing field. That also means that any company anywhere in the world can infringe your patent – and get away with it if you have not locked up patent protection in the larger economies. In securing patent protection for your invention, keep these critical numbers in mind and be smart about it.



Licensing versus Selling – and Licensing versus Buying – a Patent
Posted: 3/19/2020

We are asked all the time by both patent owners looking to monetize their patents and businesses looking to acquire new technology the benefits of licensing versus selling or buying a patent. So here is our 2 cents.

Most companies prefer to own a patent. They prefer to pay cash, own the patent, and carry it on their books as an asset. They can practice the patent, and assert it against any and all infringers. They may have strategic partners to which they might license or cross-license the patent. But all things being equal, if they have the cash, businesses prefer to buy and own the patent.

If a company does not have the cash to buy a patent outright, it will consider licensing it. This applies to start-up businesses, or businesses that have faced a downturn and are looking at new technologies to make a turnaround. The problems with licensing a patent – especially if it is a non-exclusive license – is that the licensor can license the patent to all of the first licensee’s competitors, wiping out any competitive advantage that the first licensee had. When a company licenses a patent, there is also the issue of computing each quarter the sales that are subject to the royalty. For example, if it is a U.S. Patent, no royalty is due on export sales, so they have to be backed out in order to compute the royalties that are due.

For the assignee, the problem with licensing is that the licensee may or may not be successful with a product line based on the licensed patent. If Company A licenses a patent, and then never generates any significant sales from products based on the licensed patent – for whatever reason – the licensor takes a hit. But if the product takes off, the licensor can do very well! Selling the patent is low risk/low return. Licensing the patent is high risk/high return.

There is also the issue of enforcement. If a patent is licensed, and the patent is infringed, the licensee often does not have standing to bring an action against the infringer, and the licensor – often an individual and the inventor – does not have the resources to pursue the infringer. So the licensee ends up with a competitor that is infringing the licensed patent and not paying a royalty.

There is no simple response to the question of whether it is better to sell or license, or buy or license, a patent. There are a number of factors that have to be considered. That is why IPOffering always takes a broad “monetization” approach when we take on a patent as a brokerage project.

There is a very good book that covers patent licensing. “Essentials of Licensing Intellectual Property” is available at Amazon for about $25.00 and it covers most comprehensively what both a licensor and licensee needs to know.

If you are a business executive torn between buying or licensing a patent – or an inventor not sure about selling or licensing your patent – we can help you determine what the key factors are that need to be taken into consideration so you can make the best decision. Because, hey, that’s what we do!

Proposed Legislation Aims to Level the Playing Field
Posted: 2/19/2020

It is incredibly ironic that in the December and January installments of Patent Leather we were covering patent infringement, so we did not have room for this news until now. Last December, Rep. Danny Davis (a Democrat from Illinois) and Rep. Paul Gosar (a Republican from Arizona) introduced the Inventor Rights Act of 2019 (H.R.5748). The bill has five main elements and it only applies to inventors who own their own patents (many IPOfferings clients fall in that category) and not businesses, universities and NPEs (non-practicing entities). For a description of what an NPE is, refer to the January installment of Patent Leather below.

  • IPR Opt-Out: The bill would give inventors the right to opt out of an inter partes review of their patentsby the Patent Trial and Appeal Board (PTAB). Accused infringers (plaintiffs in a patent infringement lawsuit) will still have the right to challenge the validity of a patent in U.S. District Court as part of an infringement lawsuit trial, but they will not have the second-bite-of-the-apple they now have to also force a patent into review by the PTAB. A common strategy of infringers is to get a patent it has been charged with infringing invalidated so it simply goes away, and that second option would no longer exist if the bill were passed.
  • Profits from the Infringer: Under current law, inventors are only entitled to receive reasonable royalties (also refer to the January installment of Patent Leather for more information on this) from an infringer, permitting the infringer to keep most of their profits generating by the infringing products it has sold and continues to sell. This bill pays all profits generated by willful infringers who knew or should have known of their infringement of a patent owned by the original inventor to the original inventor. This remedy is consistent, incidentally, with other forms of intellectual property including design patents, copyrights and trademarks.
  • Injunctive Relief: This bill would also entitle an inventor to an injunction prohibiting sales of infringing products, a remedy-at-law no longer available to inventors since the 2006 eBay Decision (additional information on the eBay Decision is included in the January Patent Leather installment).
  • Venue Preference: The bill gives inventors the right to file patent infringement litigation in their home judicial districts. They are currently required to sue an infringer in a district in which the infringer has a facility, and that could be the other end of the country, adding additional costs and burdens for the inventor.
  • Fee Recovery: Inventors – under this bill – would be entitled to recover from the defendant (infringer) their attorney fees if they exceed more than 10% of the amount of damages awarded to the plaintiff.
We admire Reps. David and Gosar’s gumption, but they have an uphill battle as similar attempts to reform patent infringement litigation has not been successful. Here is a link to the complete proposed law. The fact that this bill applies specifically to inventors and the patents they own – and not businesses and NPEs – improves the bill’s chances of passage.

We suggest you send an email to your U.S. Representative expressing your support for H.R.5748. Let’s see what happens.

What You Probably Did Not Know about Patent Rights
Posted: 2/19/2020

When one of us speaks at a conference or other event, we like to work in whenever appropriate that the right to patent an invention or copyright a document actually predates such other established American concepts as Freedom of the Press, Due Process and Habeas Corpus. And here is why…

The First Constitutional Convention met in Philadelphia in 1787 and hammered out what is the original U.S. Constitution. By “original” we mean the U.S. Constitution without any amendments. In December of 1787, Delaware was the first state to ratify the Constitution. That is why “The First State” appears on Delaware license plates. In 1788 Rhode Island rejected the Constitution, but later that year New Hampshire became the ninth state to ratify the Constitution, the number needed to put it into effect. Eventually all the other states also ratified it.

Article 1, Section 8, Clause 8 of the original U.S. Constitution gives Congress the power “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." It is from this section of the original U.S. Constitution that all Patent and Copyright – and later Trademark and Service Mark – laws were derived. So U.S. citizens had the constitutional right to seek protection for their inventions in the form of a patent beginning in 1788, the year the original U.S. Constitution was ratified.

The next year, 1789, Congress drew up twelve proposed Amendments to the Constitution and circulated them to the states for ratification. It was these Amendments – not the original Constitution – that included Freedom of Speech, Freedom of Assembly, the right to bear arms, protection from unreasonable search and seizure, Due Process, Habeas Corpus and the many other rights we enjoy as Americans. Ten of the twelve proposed Amendments - known today as the "Bill of Rights" - were not ratified until 1791, three years after the original U.S. Constitution was ratified.

And that is why patent rights in the U.S. predate the many rights that Americans enjoy and that are considered essential to the country we are. In fact, many historians and economists believe that the incredible prosperity, wealth formation and technological superiority that America enjoys is due in large part to our patent system – a brainchild of our Founding Fathers.

The first U.S. Patent was granted in 1790 to one Samuel Hopkins of Massachusetts for a process for making potash. The Patent Examiner was Secretary of State Thomas Jefferson and the patent was signed by President George Washington.

Even More Answers to Your Questions about Patent Infringement
Posted: 1/20/2020

Back in October and November, we focused two installments of Patent Leather on the topic of patent infringement and enforcement. We received so many questions from our readers that we printed the most common questions – with answers to those questions – in December. Well, the Turnpike Effect kicked in, and our Q&A article from December spawned net more questions! So here goes a second round of answers to your patent infringement questions.

Q: Can I get the court to order an infringer to stop selling products that infringe my patent?

A: Maybe. It depends on what class of patent holder you fall into. Class? Yes, class. There are, in fact, two distinct classes of patent holders, and the remedies available to you as a patent holder when your patent is infringed depends on what class you are in.

◆ NPE: An NPE (non-practicing entity) is a patent hold that does not “practice” his or her or its patent. Most universities own patents that were developed by their faculties, but we know of no university that has a factory on campus that manufactures products based on one of the university’s patents. Most universities have a Tech Transfer department that licenses the university’s patents to industry. So universities are NPEs.

An inventor who does not make a product based on his or her patent is also an NPE.

There are businesses that own patents they do not practice. The R&D staff comes up with a great idea, so the company applies for a patent. Smart move. But Marketing decides there is no market for a product based on that patent, or such a product is not a good fit with the company’s other products, or the product is not core to the company’s business model, or for some other reason decides to not practice a patent owned by the company. Many such companies come to IPOfferings to represent them in the monetization of their “non-core” patents. A company that owns a patent it does not practice is an NPE.

And then, of course, there are patent assertion firms that acquire infringed patents specifically to assert them against the infringer(s), so patent assertion firms are NPEs.

◆ Market Participant: The opposite of an NPE is a “Market Participant.” A Market Participant is almost always a business, and the business owns a patent or several patents that it “practices” – it makes and/or sells a product or service that uses the invention covered by one or more of the patents owned by that business.

The remedies available to an NPE are much different than those available to a Market Participant. When an NPE sues a company for infringing its patent, it has just one remedy available to it under law – reasonable royalties. It can demand that the infringer pay the patent holder what the infringer would have paid the patent holder had the infringer licensed the patent in the first place. If the patent holder can prove that the infringement was willful – the infringer knew about the patent but when ahead and infringed it anyway – the patent holder can sue for treble damages. But the only remedy-at-law available to an NPE is the royalties that would have been paid by the infringer had the infringer properly licensed the patent in the first place.

A Market Participant, however, has three remedies available to it. It can demand reasonable royalties from the infringer just as the NPE can. And it can sue for treble damages if it can prove the infringement was willful.

The Market Participant can also sue for lost profits. By selling products that infringe the Market Participant’s patent, the infringer essentially stole business from the Market Participant since customers would have purchased the Market Participant’s products had the infringer not been selling infringed products that directly competed with the Market Participant’s products. So the Market Participant can estimate what the sales of its products would have been had the infringer not been selling directly competing products, and the Market Participant can sue the infringer for the profits it would have generated on those sales.

The third remedy-at-law available to a Market Participant – and not an NPE – is “injunctive relief” – a court order that bars the infringer from continuing to sell the infringing product. In what is known as the “eBay Decision” the U.S. Supreme Court ruled that an injunction blocking an infringer from selling infringing products should not automatically be issued to all patent holders. It created a four-factor test that the courts must apply. We will not go into all the details, but the primary result of the eBay Decision is that NPEs routinely do NOT receive injunctive relief, but it is granted to Market Participants.

When Apple sued Samsung back in 2010 in the “patent infringement lawsuit of the century,” Apple asked for an injunction barring Samsung from importing into the U.S. and selling the Galaxy smartphones that infringed the Apple patent. The District Court judge did not grant the injunction. Apple appealed the decision, and the appellate court ruled that the District Court should have issued an injunction an injunction that barred Samsung from importing and selling infringing products. It was a Pyrrhic victory for Apple, however, because by the time the appellate court made its ruling, Samsung had moved on to a new model of smart phone and it was no longer selling the model that infringed the Apple patent.

So the answer to the question about getting the court to order the infringer to cease sales of the infringing product is that if you are an NPE, seeking a court order to bar sales of infringing products is not a practical objective for you to pursue. However, if you are a Market Participant, you can pursue injunctive relief as a remedy for infringement of your patent.

For those of you who are interested, the official title of the eBay Decision is “eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)” and Wikipedia has a well written article on the decision if you want to learn more.

Q: What is the difference between a patent and a trade secret? Can you sue for infringement of a trade secret?

A: A “patent” is a bargain with the U.S. Federal Government under which in exchange for disclosure of your patent the federal government grants you a 20-year monopoly. You have the exclusive right to manufacture and sell a product based on the invention covered by your patent for 20 years from the Application Date of the patent. Or you can license that right to someone else, or you can sell the patent, and the new owner (or “assignee”) of the patent now has the same rights granted to the applicant. And you have the right to sue any person or business that infringes your patent.

A “trade secret” is first and foremost a “secret.” You file no application and you share the invention with no one. It is your little secret. And it is your trade secret for as long as you can keep it a secret. One of the most famous trade secrets is the formula for Coca-Cola. John Pemberton made the critical decision in 1886 to NOT file for a patent on the formula, but to keep it as a trade secret. It remains a trade secret to this day. The formula for Coca-Cola – as legend goes – is safely locked in an Atlanta bank safety deposit box, and only a few long-term and highly trusted (and, we assume, well paid) Coca-Cola employees know the formula. Had Pemberton secured a patent for the Coca-Cola formula, that patent would have expired over 100 years ago.

A trade secret is not a practical strategy for a device or tool or other physical product because it can be reverse-engineered by a competitor who could then make a directly competing product. So a process or formula used to produce a product is a far more reasonable candidate to be treated as a trade secret.

If a trade secret is stolen from you – and you can prove it – you do not sue for infringement (that only applies to patents and trademarks), you actually charge the party that stole your trade secret with theft. Many states have laws that specifically cover theft of trade secrets.

Companies that have trade secrets must go to extraordinary lengths to protect them. Only a small number of trusted employees can know about the technology, and access to facilities that use the trade secret should be very limited.

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