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Patent questions

Postby brownframe » October 15th, 2016, 4:08 am


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Hi guys,

I am new to the business so I have a few questions about patents.

I have been reading about monetizing a patent and there seems to be two options: charging money upfront and royalties. However my question is how can a designer know how many items was sold of the product? The seller can cook the books to conceal the numbers. How does royalties work from the accounting sense.

My other question is about applying for the patent. If an idea is simple that it can be copied easily what prevents a patent clerk at the USPTO for instance from stealing the idea and selling it before the patent gets protected? Do they sign a NDA for instance?

Thanks.

Adonia

Re: Patent questions

Postby Cyberdemon » October 16th, 2016, 9:27 am

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Truthfully most of the time people ask these questions, the idea in question may not be patentable, or more importantly enforceable (able to be upheld in a court).

As far as "monetizing" a patent - if you have an idea for a product that is novel and patentable you need to ask the following question:

-Why would another company try to pay you money to knock off your idea? Any royalty cuts into their bottom line and realistically they would much rather work with you in the first place to produce your idea (and not under the threat of legal action) and sell it.

-Consulting firms are sometimes able to get royalty on products which are designed in exchange for a reduced up front fee. IE instead of charing $100k to develop your product, I will take the risk and say give me 10 cents of each one sold instead. In this case, the manufacturer of the product is getting a lower up front cost in exchange for an honest business agreement - these will be signed into contracts which means if the manufacturer was caught lying about how many were sold, the cost of legal action again would be much greater than them just being honest.

-The USPTO does not steal patents - they are not in the business of waiting for "super great ideas" to show up so they can tell their buddies. You are not the first person to get a patent and this is a non issue.

Here is the reality about patents:

-They are expensive to get, and even HARDER to legally enforce. Even if you patented Widget A and a company came over and knocked it off, you would have to then gather the legal resources to sue that company. If this is some small simple idea, then it is likely not patentable in the first place. There are two types of patents, Utility (a novel function) and Design (a unique aesthetic not tied to any specific function). Utility patents are hard to get because you need to prove you are truly the first person to come up with an idea - and also prove that someone couldn't easily circumvent your patent by changing one of the steps or pieces of the design slightly to make it "unique". Design patents are easy to get and very hard to enforce - all it takes is a slight change to the aesthetic design for something which functions similar to have a completely new design.

-Patents are EASY. Building a product is hard. I could patent something that would take millions of dollars in R&D to actually bring to market, and not have a large enough market size for anyone to actually want to take that risk. So going out and getting a patent and expecting someone to come license it from you is a common, and almost 100% flawed strategy.

If you actually have an idea for a good product:

-Forget about the patent, build it. Figure out what it takes to actually make it work, and prototype it to the point where you can share it with people.

-If people like it, consider looking for investors. Kickstarter has made access to capital easier than ever, and there are engineering and design firms who can easily take your rough prototype into a manufactured product.

-If the market really exists, then worry about filing patents for protection - but speak with an actual patent attorney first. Patents are now on a "First inventor to file" system, which means if multiple people have the same idea it's about who puts the idea in writing first, but showing the date that you initially disclosed the invention can block any other people from patenting the same idea.

Long story short, don't expect to become rich off a patent. Patents are cheap, making something is hard.

Re: Patent questions

Postby brownframe » October 16th, 2016, 11:43 am


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Hi,

Thanks for your reply, however you did not answer my questions.

In your example, you are explaining how the threat of law would dissuade the company from not disclosing the correct amount sold, however my question is not about policy, which comes at a later stage, it is about how can a designer know how many items were sold of a product without having to see the financial statements of the company which most probably the company won't want to share with the designer.

I still don't understand why a clerk at the USPTO won't sell the idea? Sometimes a small change in a product can improve its function and the clerk can sell this information to the market. I see no barrier for the clerk to do so. I am not talking about an honest clerk, I am talking about one who wants to take advantage of their position to make a quick buck before being caught.

Re: Patent questions

Postby Mr-914 » October 17th, 2016, 7:27 am

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I get the feeling that you are relatively young. When I started in design, I thought my ideas would be stolen. Then I worked for 14 years and realized that even when you jam your greatest idea down someones throat, they get ignored.

a. Patent clerk. These people are way to busy with their job to go and try to sell some idea on the side. Plus, they would likely face termination for violating the privacy of their clients.

b. Naturally, people really like their ideas and think your ideas are dumb. Until you are making $300million on your idea, no one will pay any attention to you.

As for your other question, "how does a designer know how many items were sold?" - ultimately, they don't. Hopefully, the company has some requirement to publicly disclose some data (SEC filings) that can be used to double check them. Legal action could probably result in some disclosure as well. Ultimately though, if the product sells well, the client will want to work with you again and won't burn the bridge by trying to hide a few grand in royalties.
Ray Jepson

"The key to success in this business is to find a boss who doesn't care." - Mike Rowe

Re: Patent questions

Postby Cyberdemon » October 17th, 2016, 7:54 am

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brownframe wrote:Hi,

Thanks for your reply, however you did not answer my questions.

In your example, you are explaining how the threat of law would dissuade the company from not disclosing the correct amount sold, however my question is not about policy, which comes at a later stage, it is about how can a designer know how many items were sold of a product without having to see the financial statements of the company which most probably the company won't want to share with the designer.

I still don't understand why a clerk at the USPTO won't sell the idea? Sometimes a small change in a product can improve its function and the clerk can sell this information to the market. I see no barrier for the clerk to do so. I am not talking about an honest clerk, I am talking about one who wants to take advantage of their position to make a quick buck before being caught.


You can not know how many items were sold. That is private company data that you will never have direct access to. Other than PR announcements such as "1 Million widgets sold" or quarterly earnings filings (which only applies to public companies and does not always include exact numbers) you can not know. Which is why in my previous post I mention the only way you have any backing here is to have a good standing relationship with the company that ensures they want to pay your royalties.

RE why a clerk won't steal your idea:

-Patent clerks are not $8 an hour DMV employees. They are well trained engineers or scientific investigators who enter the field and do not have an incentive to try and make a "Quick buck" off a patent. The whole point of my post above is there is no such thing as a "Quick buck" when it comes to patents - you are missing that point. Patents are simply legal protection of an idea that will take hundreds of thousands if not millions of dollars and man hours to produce. Once your patent enters the US patent office it has been disclosed, which means that IP is basically worthless to any other company at that point who really would want to steal your idea. All it does is set them up for a massive lawsuit and bad publicity.

Patent clerks do not steal ideas for the same reason design consultancies do not steal ideas - most people who spend years building up a professional practice do not throw it away because they think your idea will make them rich overnight.

Re: Patent questions

Postby iab » October 17th, 2016, 8:14 am


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brownframe wrote:In your example, you are explaining how the threat of law would dissuade the company from not disclosing the correct amount sold, however my question is not about policy, which comes at a later stage, it is about how can a designer know how many items were sold of a product without having to see the financial statements of the company which most probably the company won't want to share with the designer.

Here is a crazy thought, make disclosing the financials a part of your licensing agreement. And before you ask your next obvious question, yes, they could have 2 sets of books (you watch to much TV, rots the brain). That would be fraud. Fines and jail time is the deterrent.


brownframe wrote:I still don't understand why a clerk at the USPTO won't sell the idea? Sometimes a small change in a product can improve its function and the clerk can sell this information to the market. I see no barrier for the clerk to do so. I am not talking about an honest clerk, I am talking about one who wants to take advantage of their position to make a quick buck before being caught.

You have got to be kidding? Right?

Does this fictitious patent clerk own a manufacturing plant? Does this fictitious clerk have a distribution chain? Does this fictitious clerk have unlimited financing?

Or do you actually believe that having a patent automatically makes you rich?

Or do you think there is no paper trail when a patent is submitted?

If I were you, I'd seek help or get a cabin in the woods lined with tinfoil.

Re: Patent questions

Postby brownframe » October 17th, 2016, 2:28 pm


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Hi guys,

Thanks so much for your valuable answers.

I like your idea iab to ask for the financials in the contract. I don't know if they would show me the financials but I like the legally binding right to view their financials.

And from all your replies, it would be for the benefit of the company to deal straight with a designer especially if the product sells well.

As for the clerk, I understand and even I sometimes don't have time for my own ideas :P. However I still believe that once an application for a patent is submitted to the clerk, the clerk would sign a paper that the designer can keep in the file, acknowledging that the material submitted is confidential and provides the criminal penalties of doing otherwise. At least from a psychological point of view the clerk would each time be reminded how valuable the information he is handed and that it should be handled with utmost care.

Thanks again for the valuable information.

Adonia

Re: Patent questions

Postby Cyberdemon » October 17th, 2016, 3:58 pm

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Coming from the corporate side, the disclosure of a full book of financials, especially for a private company will likely not fly. The only number you really have any legal right to would be the total # of units sold - their margins, expenses, and sales of other products are not relevant to you and disclosing them exposes them to a far larger risk from a corporate perspective than from your individual interests.

Lastly, your concerns about a clerk should be less than your concerns about the attorney you will need to contact for your patent filing. Patent filings are very complex, require specific language, drawings, and claims which based on your current questions you are not equipped to handle yourself.

If you have concerns I would recommend you find a local, reputable patent attorney (with whom you can execute an NDA) and work through the process with them.

Re: Patent questions

Postby FH13 » October 17th, 2016, 4:39 pm


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That's the first time I hear of somebody afraid of a Patent clerk stealing their idea.
What if the patent attorney steals the idea, or the secretary making copies, or the design house, or the prototype maker, or maybe the product photographer....where does it stop?

Provided you get your product up and running would you be prepared for the Chinese factory telling you "we will copy your product if you bring it here?". We had a client tell us that story.

Like it has been said. Do you have hundreds of thousands of dollars to sue another business? Are you prepared to fire your manufacturer and start from scratch just to have your product copied and sold under a different brand.

File your patent and make your product and deal with the punches as they come.

Re: Patent questions

Postby brownframe » October 18th, 2016, 6:35 am


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Thanks Mike for the advise. The best thing would be to visit a local patent attorney and discuss their services to understand the process better.

Re: Patent questions

Postby sunnyy » October 20th, 2016, 2:25 am


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hello guys.


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