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Summing it Up - Part 20 in our IP and Patents Series

2012-03-01T06:00:00.000-08:00

This is the final part in a 20-part series of articles on intellectual property protection and commercialization.

Over the past few months, we’ve posted a lot of information, consisting mostly of summaries relating to intellectual property, patents, commercialization and other related topics. None of these articles are comprehensive, and they are not meant to be – they were simply meant to help a novice acquaint his or her self with some of the processes involved in these areas.

We’ve been concentrating on three general areas:

Having an idea
Protecting the idea and
Turning the idea into something useful

Intellectual property is an interesting term – the words themselves seem to refer to things you own in your head. But, to expand on that, to make the idea useful, takes work, perseverance and a sometimes difficult but vital dose of honesty.

We are a country and a people built on innovation and risk. Ideas are great, but good ideas that are not implemented are useless.

And, while we have harped on the concept that, if there is no market for the idea then it might need to be abandoned, keep in mind that creativity is not black and white – true innovation rarely is planned.

Penicillin, potato chips, Teflon and Viagra have one thing in common: they were each discovered by accident.

So, despite our harping, an idea that seems nutty might just change the world for the better.

It’s a tough, unexplainable and impossible balance. No one can truly tell 100% of the time when to quit and when to continue a pursuit.

All we can do is keep in mind a quote from someone who knew a whole lot more about ideas than anyone else:

“If at first, the idea is not absurd, then there is no hope for it.” – Albert Einstein

Small Business and Entrepreneurship - To Startup or Not To Startup Part V - Profit Loss and Break-even

2012-02-28T05:31:00.000-08:00

"Remind people that profit is the difference between revenue and expense. This makes you look smart." -- Scott Adams

In this section of our look into the decision of whether or not to start a new business, we will look at compiling the results of our financial projections. We've taken a look at collecting our expected costs, and predicting our future sales. Now we will combine the two but first we should note that there are many ways to format a cash flow projection spreadsheet. We will make some general recommendations that may help with analyzing the results but these are by no means the only way to do things.

For your columns, a typical dating format may begin with monthly figures (Month 1, Month 2, etc) for the first year, go quarterly for year two, and yearly for the remainder of the projection. Financial statements will typically be compiled for 3, 5 or 10 year periods.

As far as formatting the rows it is usually helpful to arrange figures categorically, and to help analyze your results later it is best to put in as much detail as you can. Remember, this set of figures is to help you make a decision on starting a business (as opposed to presenting an idea to an investor, or convincing a boss to authorize a project), we are not looking to hide anything from ourselves, we want information and functionality. Typically you would start with revenue figures, then costs, then totals, and it is helpful to try to list your assumption in the first column after your descripion, something like:

If you are able to list your assumption this way and tie your monthly or yearly figures to the assumption using formulas then changing the assumption should update all the fields in the forecast allowing for quick updates or easy sensitivity studies.

When listing your revenue figures it could be helpful later to embed in your projections the process used to determine your numbers. If you are using a salesman/marketing effort based calculation perhaps your revenue section will look something like:

Number of Sales Staff
Number of Potential Customers Reached per Staff Member
Amount of Advertising Budget
Number of Potential Customers Reached per $10,000 in Advertising
Total Number of Customers Reached
Percentage of Reached Customers Converted to Sales
Total Unit Sales
Price
Total Forecasted Sales

Of course we can abbreviate them in our spreadsheet, but laying out all the detail will allow us to play with the assumptions and analyze changes once we are done.

When listing costs it is helpful to be organized by categories perhaps by listing up-front costs first (these may only show up in month 1 but it is nice to have the total easily identified). We can further organize our costs into variable and fixed monthly expenses. Variable would contain things that vary with the level of production (such as materials, shipping, packaging, manufacturing labor, etc); while fixed costs are monthly expenses that are expected to be roughly the same despite the current level of production (such as rent, salaries, insurance, utilities, office supplies, etc).

Now that we've compiled our revenues and costs we will want monthly (or quarterly or yearly depending on your date formatting) totals for:

Total Cash In
Total Cash Out
Net Cash Flow

In addition to this we will want a running total of our cumulative cash flows. Totals should look something like the simplified example below:

Once we've compiled all our figures and totals we can look for some key points. One is the cash-flow positive point. This is the point where your net income exceeds your net outflow, when you have more money coming in than you expend. At this point your company will start making back some of the money it needed to get started. In the simplified example above, this occurs at Month 8 of Year 1, with a Net Cash flow of $2,500 ($7,500 in sales and $5,000 in expenses).

The month prior to that, Month 7 year 1 is significant as well as that is the point where your cumulative losses cease to increase. This figure is thus your "cash need". In the simplified example this company expects to lose a total of $17,500 before it becomes cash-flow positive and therefore this company needs to come up with $17,500 in order to make it to Month 7 of Year 1 at which point it should be okay on its own.

The other significant point is Month 11 Year 1, this is the cash flow breakeven point, the point where the company has made back the money from its cash needs. Next week we will take a more detailed look at our completed financial projections including cash needs, and sensitivity to our assumptions.

The Copyright Process - Part 19 on our IP and Patents Series

2012-02-23T06:00:00.000-08:00

This is the nineteenth in a planned 20-part series of articles on intellectual property.

In this posting, we will take a look at the process of obtaining a copyright.

In reality, the way one obtains a copyright is to simply produce an original work. According to the US Copyright Office, “your work is under copyright protection the moment it is created and fixed in a tangible form that it is perceptible either directly or with the aid of a machine or device.”[1]

However, you might want to let them know about it just the same! Registering the work ensures a public record of your ownership. In the event of legal issues surrounding the work, a registration with the copyright office can be of great benefit.

Submitting a work for copyright registration is straightforward and can be done online or by hard copy. An application form, with a small fee (generally $35 to $65 [renewals are more] depending on the form, the item being copyrighted and whether it is submitted online or by hard copy) and copy or copies of the work in the proper format are all that is required. The copyright office will review the filing and respond.

Visit the US Copyright Office website at http://www.copyright.gov for more information and to register your work. Doing so is inexpensive and, in many case, well worth the effort.

In our final post we will provide a summary of intellectual property and commercialization.

[1] http://www.copyright.gov/help/faq/faq-general.html

Small Business and Entrepreneurship - To Startup or Not To Startup Part IV - Sales Forecasts

2012-02-21T05:32:00.001-08:00

"At my lemonade stand I used to give the first glass away free and charge five dollars for the second glass. The refill contained the antidote." -- Anonymous

In this part of our series on the decision of whether or not to start a new business we will look at sales forecasts. The two major parts of our financial projections, costs and sales, are very different entities to predict. Whereas predicting costs can be basically an exercise in brainstorming and collecting quotes, sales projections require a lot of thinking about what exactly is the nature of our business and what is our business model - how are we going to make money?

First off, what are sales projections? Well, they are educated (hopefully) guesses about how much money the company expects to generate over the next few years. They are usually wrong and the farther out the projected figure, the more likely it is to be wrong. They are often shaped something like a hockey stick (see Exhibit 1), and they tell a story. Sales forecasts can say something like "we don't expect to make any money for the first year while we do product development, but then we will start limited sales as we hire a small sales staff. Soon our marketing efforts will begin to pay off as customers realize the superiority of our product and viola! We get a larger sales staff, things take off and we never look back (see Exhibit 1)".

Before we begin to determine some numbers, let us think about the purpose of these projections. In this circumstance the figures are for ourselves. We are not trying to sell a project to ourselves, we are trying to decide whether or not to start a business. This is a potentially serious undertaking, and we want to have as clear an idea as possible of what to expect should we decide to go ahead. For that reason we want to use as much of a sound and realistic basis for our projections as we can.

So a good way to begin is to think about the nature of your product, how you expect to generate revenue, and what the major roadblocks to more significant revenue may be:

Will your sales be reliant upon the efforts of a direct sales force?
Is the size of the sales force a limiting factor in your ability to generate additional revenue?
Do you need the cumulative effect of marketing efforts (i.e., "getting the word out") before you see significant sales?
Are you limited by manufacturing capabilities - can you only produce X number of units per month?

Consider the following two sound examples of determining initial sales figures:

"I will begin with 3 sales people, and we will spend $50,000 on advertising. I expect my sales people and ads to reach 300,000 people and 5% of those will purchase my product meaning 15,000 units sold. I do not expect to have any difficulty meeting those production demands. With my product priced at $10.00 this gives me $150,000 in sales during the first year".

The second example is:

"My product will take 300 hours to produce and I expect to start with 4 technicians meaning I can produce at a maximum 2 products per month. I don't expect to have difficulty selling the product at $25,000 a piece so I expect initial sales of $50,000 per month".

What both of these examples have in common is that the basis for the sales figures is founded in logic. If all the assumptions (such as "5% will purchase my product", "my product takes 300 hours to produce", or "$25,000 is a good price for my product") are reasonable then the sales projections these methods yield can be just as reasonable.

Both of the above examples identify where the sales come from, and both identify limiting factors. However, it will not always be possible to generate a sales forecast using this "bottom-up" type of method. One common "top-down" method used instead utilizes market share to determine sales figures. This method is to identify the likely size of the market during your time period and identify what percentage of the market you think your product can control, relative to competing products. So if you enter a $150 million per year market and expect to control 0.5% (for the duration of the year) you would generate $750,000 in revenue.

The sales forecasts generated by this "top-down" method are just as reliable as the assumptions used to determine the size of the market and the percentage of market share expected to be captured. The problem is that it can be difficult to make a logic-based prediction of captured market share, and that when compared with "bottom-up"forecasting methods, the "top-down" methods do not take into account as much the nature of the product or business.

Whatever the method we have used to determine our initial sales forecast, it is now time to think about growth. If we've used a "bottom-up" type approach for our initial sales forecast, growth could be determined by adjusting the variables according to the future nature of the company. Looking at the "sales force" first example above, perhaps after a year and $150,000 in revenue you think it would be a good time to expand the sales force and increase your marketing budget. You could then adjust the figures and %s accordingly and calculate your sales figures for the next period.

When using a "top-down" market share approach to predicting sales two things to consider would be the growth in market share of your company (say we moved from 0.5% to 1%) and also the growth in the market itself (maybe the market itself by 10%). Adjusting both figures accordingly will yield your next period's sales forecast.

The bottom line in both forecasting costs and forecasting sales is that the numbers are going to be just as good as the logic and assumptions we used to create them. If we are trying to decide whether or not to start a business we do not want to mislead ourselves with poorly founded figures. The numbers are going to be wrong, it is doubtful that any financial projection ever compiled was 100% accurate; but it is important to get as close an idea as possible to what we can expect should we decide to start this business. Now that we have calculated our expected sales and costs we will take a look next week at compiling and analyzing the results.

An Overview of Copyrights - Part 18 in our IP and Patents Series

2012-02-16T06:00:00.000-08:00

This is the eighteenth in a planned 20-part series of articles on intellectual property.

In this posting, we will take a look at copyrights – what they are and what their value might be.

A copyright protects “original works of authorship” (see the link below to the US Copyright Office, which explains copyright law in detail). This is different from a patent (which protects an inventor from someone who might steal an invention) and a trademark (which protects the use of a word, phrase, symbol or design that is used to distinguish one source from another). Copyrights protect things like original books, stories, songs and software.

In terms of protection, the US Copyright Office says that once an original work is created and put into a tangible form that is decipherable, it is automatically protected. However, like trademarks, it probably makes a lot of sense – from a legal standpoint – to copyright one’s works.

One of the most famous cases of copyright infringement involved Napster – the website that offered music sharing online without the permission of the copyright owners. Napster was sued, lost and was purchased in bankruptcy proceedings.

Another well-known example is George Harrison’s song My Sweet Lord, which was found to be an unintentional and “subconscious” use of the tune from the copyrighted song He’s So Fine by the Chiffons from several years earlier. Although no one believed Harrison plagiarized the song intentionally, he still had a judgment entered against him for over a half million dollars, which was paid and the issue resolved.

Brad Templeton has a nice web page that explains some myths about the use of copyrighted works. If you want to learn more, it’s definitely worth a visit, as is the US Copyright Office site:

Templeton’s site: http://www.templetons.com/brad/copymyths.html
US Copyright Office: http://www.copyright.gov/

In the next post, we will discuss the (very straightforward) process of obtaining a copyright.

Small Business and Entrepreneurship - To Startup or Not To Startup Part III - Costs

2012-02-14T05:37:00.000-08:00

"If you would know the value of money, go and try to borrow some." - Benjamin Franklin

"Dogs have no money. Isn't that amazing? They're broke their entire lives. But they get through. You know why dogs have no money? No Pockets." - Jerry Seinfeld

Happy Valentines Day! In the spirit of Valentines Day we've decided to continue our Small Business and Entrepreneurship series with a look at determining the costs of starting a new business. :-)

As we continue our series on examining the decision to start a new business we want to note that while we will cover many topics there is no specific order in which any of this work needs to be conducted. It may be that in researching your target customers you develop a better "idea" and go back to refine your prospective product. Perhaps you complete a set of financial figures only to determine in other research a new set of costs you had not previously considered. The point is the whole work, as anything in life, can be an ever-changing piece. Knowing when to say "enough is enough I've done enough research" may be just as important as understanding anything else in this process.

In our next few articles we will examine financial projections. We will begin here with examining costs, and in the coming weeks we will look at projecting sales, analyzing our results, determining cash needs and then we'll begin to get into marketing with a look at product pricing.

Financial projections consist of two major parts - revenues and costs. When begining to think about starting a new business it is often helpful to do a quick calculation - "I think I can make $X.XX and it will cost $X.XX" (hopefully more like $X,XXX,XXX.XX for the former and $X.XX for the latter of course), but at some point it will be necessary to get into a litter more detail.

We can begin by simply making a list of every cost we can possibly think of. Of course, businesses vary widely in their nature and for that reason no two lists of costs will look the same. There is an equally wide variety of ways to categorize or group these costs together when constructing your financial projections. But for this "brainstorming" type of exercise it can be helpful to look at potential costs in a systematic, organized manner. In other words, to "brainstorm" by category, something like:

Pre-Launch Costs - Are you going to need a functioning prototype of a product prior to launch? Sometimes beginning companies can arrange orders with customers prior to launch (after confirming with manufacturers what it will take to produce a product). Sometimes companies can even secure advanced orders and get cash in house before beginning production, but this is not always the case. Does any additional research or other product development need to be conducted prior to launch? You may not be completely certain your product will work, does any testing need to be conducted first?

Up-front Costs - These up front charges are more specific to operations than the pre-launch "development" type costs discussed above. Will you need manufacturing or other types of equipment? If you need an office or warehouse space, what about rent and security deposits? Also consider office supplies, office equipment, state Business and licensing fees? Are there any other legal or licensing fees for establishing your type of business?

Production costs - What is it going to take to actually produce your product or service? What sort of materials or training will you need? At this point do you believe you will be manufacturing the product yourself or contracting with another company? What about packaging for your product? If this is a service what materials do the service providers consume?

Shipping - Does this item need to be shipped? Do you know what the weight and dimensions of a packaged product may be? What geographical range do you think your customers will inhabit and therefore, what would be the range of your shipping costs to reach them?

Operations Costs - This would be things like monthly rent, phones, utilities, internet, marketing costs, travel, and office supplies, but also make sure to consider insurance. How many employees do you think you will have? How much would it cost to cover workman's compensation insurance? What about general liability and/or product liability insurance?

Employees and Labor - How many people will you need for production of your product or service? What about for support, management, accounting, sales and marketing? What are the current market rates for those types of employees? If you do have employees what about their payroll processing and benefits?

After compiling a good list of potential expenses it is time to come up with some figures for them. As the saying goes "garbage in garbage out"; if the estimated figures you determine for your individual costs are based on nothing, then the results of your financial projections will be just as meaningless. This can be a time-consuming process but it is an important one. Collect quotes for each of the items in your list. People often remark that when starting a business everything "takes twice as long and costs twice as much" as what is expected. The goal here is to come up with as accurate a picture as possible of what you are likely to face. After you start your business if some things come out more expensive than you expected, that is ok and to be expected. However, if everything costs twice as much as you expected you could be in trouble!

Determining costs is an important part of the process of deciding whether or not to start a business. It is important to try to think of everything you can. Many overlook things like general liability, workers compensation or product liability insurance, legal fees, business establishment costs and licensing fees. One large missed expense, or the combined impact of many small missed expense, can seriously hurt a business. Next week we'll take a look at what should (hopefully) be a happier subject, sales!

Scientists use nanotubes to kill breast cancer cells

2012-02-10T07:39:00.000-08:00

We've all been touched, in one way or another, by cancer -- with relatives, people we've known or even our own struggles with the disease.

One of the worst forms is breast cancer. According to breastcancer.org, "about 1 in 8 U.S. women (just under 12%) will develop invasive breast cancer over the course of her lifetime."

Yesterday, however, we received a little bit of good news: Science Daily published an article showing that inserting a special kind of nanotube into a breast cancer cell and applying heat can kill the cell. The article can be found here: http://dld.bz/aQa55

Nanotubes are extremely small -- on the order of 1/1000th the width of a human hair; on the scale of molecules. They are usually made using nanopore templates, similar to the kind we can make using our patent pending technology. If you picture blades of grass, you get an idea of what these things generally look like -- tiny poles standing on end.

They can be made out of a variety of materials. So, if a way can be found to attract them to cancer cells, attach them to the cells, then apply heat or a current or whatever is necessary to kill the cell, we'd have an effective cancer fighting tool.

The research here was funded by the National Institutes of Health and the Department of Defense Breast Cancer Research Program (yes, that's right -- the DoD has a breast cancer research program). Programs like these point out the need for certain kinds of government funding (as opposed to bridges that go nowhere and loan guarantees for companies that go bankrupt).

This research is terrific news, of course, but there is a long way to go in this fight. We strongly encourage donations and support to worthy cancer charities. There are many of them out there, but we (i.e., Enable IPC personnel, individually) have supported, and continue to strongly support, the Susan G. Komen Foundation (the recent news and ridiculous politics of late notwithstanding).

The Registered Trademark Process -- Part 17 in our IP and Patents Series

2012-02-09T06:00:00.000-08:00

This is the seventeenth in a planned 20-part series of articles on intellectual property. In future posts, we will explore copyrights.

In this posting, we will take a look at how to register your trademark with the US Patent and Trademark Office (USPTO).

As noted in our last post, a trademark protects a word, phrase, symbol or design that is used to distinguish one source from another. Registering trademarks with the USPTO means you have a “legal presumption” of ownership of the trademark. It’s an important distinction, as we discussed in the previous posting.

The process to obtain a trademark is well-explained at the USPTO website here: http://www.uspto.gov/trademarks/process/index.jsp. Below, we’ve provided a shortened, summarized version of what the USPTO has already published at the link above.

The applicant should begin with a search of the USPTO trademark database, to make sure that no one else has already registered the mark for use in your field. This can be done at: http://tess2.uspto.gov/bin/gate.exe?f=tess&state=4003:a9kk1u.1.1.

Assuming you find that no one else has laid claim to your mark, the next step is to complete an application, which can be done online at the USPTO website. It is not too complex, but still you may want to enlist the help of an attorney or an online legal website, such as LegalZoom.com. This will cost you more, but you will be assured that the application will be filed correctly.

There will be a “basis” for filing that you will need to identify – that is, whether you are currently using the mark in commerce or whether you have an “intent to use” the mark. In addition, there is a filing fee, which will probably be between $300 and $400, depending on a number of things. The schedule of fees for the USPTO can be found here: http://www.uspto.gov/web/offices/ac/qs/ope/fee092611.htm#tm

The USPTO will review your application and, if the examiner finds a reason not to allow the trademark, he or she will issue an office action (i.e., a letter) to you explaining his or her finding and the reason(s). The applicant has six months to respond or the application will be considered abandoned.

If the examiner has no objection (or the applicant overcomes any objection(s)), the trademark will be published in the Official Gazette, giving others 30 days to object to the mark. If there are no objections, and the basis for the filing was that the mark is already used in commerce, “the USPTO will normally register the mark and issue a registration certificate about twelve (12) weeks after the date the mark was published. After the mark registers, the owner of the mark must file specific maintenance documents to keep the registration live.” [1]

If the basis was an “intent to use”, then the USPTO will send a “Notice of Allowance”, giving the applicant six months to file a “Statement of Use”, showing the use of the mark in commerce, or file an extension. There is a fee for filing the Statement of Use.

The full cost of obtaining a trademark will vary from under $500 (for a straightforward filing based on current use in commerce) to much more if the applicant decides to use an attorney. We have found that, for trademarks, using a service such as LegalZoom is easy, straightforward and cost effective. However, if there is a greater level of complexity involved, or if one fears an office action for some reason, it is best to utilize the services of a qualified attorney.

In future postings, we will look at copyrights.

[1] http://www.uspto.gov/trademarks/process/index.jsp

Small Business and Entrepreneurship - To Startup or Not To Startup Part II - The Idea

2012-02-07T05:31:00.000-08:00

"I ain't never had an idea before, how does you know when you has had one?" -- Ali G

In the segment on Da Ali G Show from which this article's opening quote was taken, Ali G explores the commercial prospects of his new invention, the Ice Cream Glove. The Ice Cream Glove is basically a rubber glove designed to be used while eating an ice cream cone in order to protect one's hands from the dangers of melting ice cream. Most of us have had ideas for new products or businesses and most of those were probably superior to the Ice Cream Glove. Ideas do not need to be fully examined before taking the leap and turning them into businesses, but thoroughly examining an idea prior to launching a business can certainly help! This article will examine "the idea" and discuss some important components of, if not a "good" idea, then at least a "fully-fleshed out" idea.

First off, where do ideas come from, and where can I get one? Not surprisingly, many business ideas spring from work experience. As one works in a particular field or in a particular function, one gains increased understanding and expertise. Solutions to particular problems in that field or function are therefore more likely to be generated by someone with that expertise and familiarity than from someone completely detached. A person's "prior knowledge" is important in that it helps to shape the range of available opportunities that they see when considering a problem, but the key is identifying the problem.

Obviously ideas can come from anywhere, and there is no way to guarantee or predict a brilliant new idea, but there are ways to assist in idea generation. One effective way of business idea generation is to be "pain focused". When observing the world, as you go about your life, focus on your pain! Specifically, think about what is the pain, and how can I solve it? Whenever you come across an obstacle, or view others reaching an obstacle, define the problem and try to come up with solutions. For example, picture yourself walking down the street eating an ice cream cone, only to have the ice cream melt and get all over your hands and suit:

Pain - Ice cream melts and becomes messy

Solution - Gloves!

While that particular idea may already be copyrighted it provides a good example of being pain-focused. Constantly looking for pains and their corresponding solutions can, with practice, become an automatic part of one's thinking -a habit - and can perhaps lead to the next brilliant new product or service. All else being equal, an idea or product that is focused on solving a particular pain will be superior to an idea or product that is searching for a pain to solve.

Once we have a business idea it needs to be clearly defined. This is the "what, who and how" part of the idea, and means specifically identifying:

the product or service (What you will be selling)
the target customer (Who you will be selling to) and,
the business model (How you will generate revenue)

It is important to identify all 3 of these components of your idea. Why? If any one of these 3 components are lacking it can severely hamper the business potential of your idea. Let's say you have a great product and customer identified, but no business model, no way to make money - would you still pursue the idea? If you have a customer and a way to make money from them but no product? Perhaps in that situation you have identified a pain and part of a solution but just need to figure out that specific product or service to bring it all together. What if you have a product or service and a way of generating money with it but no one to sell it to - will that business get very far?

In clearly identifying the product or service, much of what we've discussed already in this article applies - what is the pain and what is the solution. This Ice Cream Glove prevents melted ice cream from getting all over people's hands. What we need next is to identify the customer.

Part of understanding our idea is understanding to whom we will be selling this product or service, how can we reach them, and why would they want it? The absolutely essential point in this is examining our idea and identifying the key benefit. Ali G says the target customer is "people who eat ice cream and people who have hands" but the key question is why would those people buy the Ice Cream Glove? What is it about our product that makes it irresistible to customers? What is the key benefit the customer derives in exchange for purchasing our product or service?

For the Ice Cream Glove perhaps the key benefit is cleanliness? Perhaps it is not cleanliness - maybe it is the prestige and self-satisfaction the customer gains in knowing that by wearing this glove in public others around him view him with envy and see him as someone to be reckoned with? Identifying the benefit helps immensely with guaging how we can later test this concept, just how successful this product can be, and helps us to begin thinking about how to market our product. Understanding the key benefit thus helps us to narrow in on and identify who our target customer is, and then we can explore how to reach them. The target customer is a vital part of any business idea. We will be discussing examining markets, targeting customers, and testing customers in more detail in later parts of our series.

Along with the idea and the customer comes the business model. Do you sell a product directly to customers? Do you provide a service and charge membership fees? Do you provide a service to people for free and instead sell advertising to other businesses? A business model in our context means primarily "how do you intend to make money"? There are some examples of companies launching without defined revenue models, especially internet based companies. Some of these have successfully implemented business plans much later in their life (perhaps they started as a hobby site and reached a large number of users and then implemented an advertising or membership-based revenue model). However, most companies are not going to be able to get very far or secure funding without explaining how they plan to generate money.

The idea is the first part of the journey towards starting a business. Clearly defining what that idea is, whom it benefits and why, and how it will become a successful business is an important part of the process of examining the commercial prospects of potential business, but it is also just the beginning!

An Overview of Trademarks -- Part 16 in our IP and Patents Series

2012-02-02T06:00:00.000-08:00

This is the sixteenth in a planned 20-part series of articles on intellectual property. In future posts, we will explore trademarks and copyrights.

In this posting, we will take a look at trademarks – what they are and what their value might be.

A trademark protects a word, phrase, symbol or design that is used to distinguish one source from another.

For example, trademarks keep Pepsi from naming its product Coke (and vice versa), they prevent Burger King from naming its hamburger a Big Mac (in case it ever wanted to), and they prevent some guy who builds custom cars in his garage from naming his enterprise Ford Motor Company. Trademarks identify and distinguish the source of the goods of one party from those of others.

Consumers (knowingly or not) rely on trademarks to ensure they are getting what they think they are getting. I was in a grocery store and noticed that, near the bottles of “Dr. Pepper” was a different version of the soft drink calling itself “Dr. Skipper”. One could easily surmise that the drink purported to be similar to Dr. Pepper (in this case, at a lower price), but had to ensure that it called itself by a different name, in case the shopper wanted the real thing.

One can trademark a word, a logo or phrase. Some examples of trademarked words include:

Versace
Fungal
Sprint
Persuasion
Imagine

Of course, this doesn’t mean the word cannot be used; someone named Versace could still be identified by that name, and if you said you were going to “sprint to the finish line”, you can’t be sued for trademark infringement by the cell phone company. However, the trademark ensures that no one else can use the name “Versace” to identify their clothing line, or “Sprint” to identify their cellular phone. The same applies to the term “Fungal”, when it comes to children’s toys, “Persuasion” for cosmetics, chocolate and wine, and “Imagine” on surfboards.

Phrases can be trademarked as well. Examples include:

The Power of You (used by Time Warner Cable)
Just Do It (Nike)
Got milk?
Quality is Job One (Ford)
and, our favorite, S/Cap RFID Tags

Logos, as well, can be trademarked. Examples include the familiar logos used by McDonald’s, Starbucks, Nike's “swoosh”, and many others.

When a logo, word or phrase is trademarked, the owner can claim that ownership by adding the letters “TM” to it. For example, the theater chain, AMC, advertises the AMC Gold Experience^TM. This phrase is considered to be a trademark by AMC, as noted by the “TM”. Anyone who feels that their logo or word or phrase is a trademark that belongs to them can add the “TM” designation.

However, when a trademark is registered with the US Patent and Trademark Office (USPTO), the designation ® can be used. For example, the same company AMC, has a ® after its term “Show Snacks^®”, which suggests that, although the terms “AMC Gold Experience” may or may not have been registered with the USPTO, the term “Show Snacks^®” has. The ® designation can resolve a host of issues and can be a huge benefit for the trademark owner, when it comes to trademark litigation.

In the next post, we will discuss the process of obtaining a registered trademark.

Small Business and Entrepreneurship - To Startup or Not To Startup Part I

2012-01-30T09:29:00.000-08:00

"I've got a very bad feeling about this" -- Luke Skywalker

The decision of whether or not to start a business can be a very difficult one. To kick off our series on small business and entrepreneurship we thought we'd start with the beginning - to go or not to go, the choice of whether or not to start a business. We'll examine what factors should play into the decision, and how to alleviate as much doubt as possible prior to deciding. Over the next few weeks we will explore these topics in more detail but first we'll take a more general look.

First off is the idea - the product or service, the target customer and the business model. In other words, we'll need to clearly define:

What it is we are selling
Who we intend to sell to (and how to reach them), and
How will we make money and just what will we do with that money

A new business idea can be anything - it can be opening an auto-repair shop down the street - it does not have to be a never-before seen gizmo to be successful. In fact, in an upcoming article we'll examine the idea of the myth of a "first-to-market" advantage for never-before seen gizmos.

Financial considerations will often be the most immediate make-or break factor when examining an idea. A quick "sell this much, cost this much" calculation can often identify an impractical idea before it gets too far and save time. After the quick "back of a napkin" type calculation however, a more detailed financial examination is necessary. We should determine:

Pre-Launch vs Post-Launch Costs?
Costs of continuing operations? Manufacturing? Employee or Labor costs?
Which costs are fixed? Which costs are variable?

Reasonable sales and financial projections need to be determined. This usually involves determining the size of the market and product pricing and combining these with costs to establish a timeline that will ultimately allow for a look at our profit and loss, the break even point and the cash needs for this company.

Market analysis is very important. How many times have you seen a furniture store go out of business to be replaced with another furniture store in the same location?

Is there really a market for this?
How big is the market?
Is it growing?
What characterizes the different segments?
Who are the customers and how are they reached?
Who are the major competitors?

Both customers and competitors should be examined in more detail as well. Customers should be examined for what really matters to them when considering the product. What benefit does this product provide them? Analysis tools such as "strength weakness opportunities threats" (SWOT) and "Porters 5 forces" (entry, rivalry, substitutes, buyers, suppliers) can be very helpful in understanding the industry and the nature of competition in the industry.

To the entrepreneur himself there are additional considerations. Starting and managing a business can be extremely stressful. Being honest to yourself about the business' potential is important. Starting a business and having potentially no income for an extended period of time can be a significant strain on personal finances and also on family life. For that reason (and others of course), honesty with your spouse is very important. We will examine this topic, the personal strains and stresses of entrepreneurship and also what qualities entrepreneurs tend to share and which (if any) are or are not necessary for success.

This concludes our overview of the decision on whether or not to start a company. In the coming weeks we will look at each of these topics in more detail and also look at other aspects of small business and entrepreneurship.

Some Additional Thoughts on Commercialization -- Part 15 in our IP and Patents Series

2012-01-26T06:00:00.000-08:00

This is the fifteenth in a planned 20-part series of articles on intellectual property. In future posts, we will explore trademarks and copyrights.

In this posting, we will take a look at some additional things to consider during the commercialization process.

In an earlier post, we noted that the commercialization process consists of the steps taken in the transition of an innovative technology or process from research to a competitive product or service. These steps assume that there is a market for the product stemming from the technology and the resources are available to turn the technology into a product. And, we noted that commercialization starts with an honest evaluation of the technology and the markets, followed by an evaluation of the steps that need to be taken to turn that intellectual property (IP) into a product.

If all the numbers add up and everything look good, then the resource question needs to be addressed: do you have the money, the personnel, the facilities, the equipment, etc.? Is the IP protected and, if not, can it be protected (or should it be protected; on rare occasions, it may make more sense to keep something as a trade secret rather than pursue a patent)?

Other questions to be asked include how long it will take to get the technology commercially ready, how the resulting product or service will be marketed, what the expected revenues and profits will be, and will it be worth the effort?

With the funding and resources secured, and with a plan in place, the commercialization activities can begin – thes einclude things like streamlining the production process, product testing and evaluation to maximize market reach, etc.

Typically, once the resources are in place, the process consists of developing the production plan (how will the production look – the steps to manufacturing the unit, design of the facility, etc.). Once these are established, companies might produce alpha (α) units (i.e., the first version of a prototype), incorporate the needed changes to produce beta (ß) units (i.e., the first versions of how the item will look during production), followed by production units.

During all these phases, from IP protection to production, it is important to remember the following things:

Be passionately dispassionate – I know this doesn’t sound make a lot of sense on the face of it. The balance one needs to maintain is very tough. The inventor is almost always very passionate about the idea – he or she came up with it; it is their baby.

It is almost like a religion – there is a lot of faith early on. And this is important to the future success of the product. Without the passion, the product likely would never have existed and the desire for someone to push it to commercialization simply wouldn’t be there. There is a lot of faith and zeal involved, especially early on – the “believers” in the product are excited about the future success and what it means. The belief is there that the product will bring about positive change. Investors want to see that passion. Potential customers want to see it as well.

But, if there is passion for an idea, but no market, then the idea of commercializing the idea likely should be abandoned. Abandoning one’s faith is a very tough thing to do. Left over believers become akin to followers of a false cult – they have their faith, but there is no rhyme or reason to their convictions.

The market needs to be evaluated fully and properly. It may be a terrific product but, if no one is going to buy it, why would a business pursue making it?

Make sure you have the resources – the number one reason for business failure is not that the idea was necessarily bad, but rather that the company ran out of money before it could attain positive cash flow. There are a number of studies on this area and, while other factors certainly come into play, most businesses fail because they run out of money before they have a chance to succeed.

In addition, there may be technical, business, accounting or marketing expertise that may be lacking. An honest assessment of your situation will point out the needs. We have all worked with more than one person who felt he or she was an expert in areas where they were actually lacking. There is no shame in admitting you need help in an area and getting it.

In future installments, we will discuss trademarks and copyrights.

Analyzing IP for Commercialization -- Part 14 in our IP and Patents Series

2012-01-19T06:00:00.000-08:00

This is the fourteenth in a planned 20-part series of articles on intellectual property. In future posts, we will continue to explore product commercialization and look at trademarks and copyrights.

In this posting, we will provide a discussion on the analysis of IP. What should you look for in determining whether certain intellectual property makes sense to pursue for commercialization?

We’ve identified some basic issues to look at as you look for candidate IP to commercialize:

What can be sold with this IP?

Many times the IP itself is for something that makes something else better. For example, Enable IPC has a patent pending on a method to create a certain kind of plate on various substrates without the use of dopants. That’s all well and good, but the real advantage here is in making things like filters – and the technology’s effect on the resulting commercial product is what must be weighted here. We didn’t look at the market for making thin plates on substrates – we looked at the advantages this should present in the filter markets – both in financial and performance improvements.

What is the value to the market of this IP?

In other words, while the IP might make something better, will it jack up the cost too high to make it economically feasible?

For example, a couple years ago Enable IPC looked at some technologies that boosted the energy storage performance of certain kinds of capacitors. There was one technology in particular that enabled significantly more energy storage than others. And, on the surface, it did not seem too expensive to add to a process.

However, capacitance is typically measured in Farads – and when we looked at the final price per farad that the ultimate customer would pay for devices incorporating this technology, it was too high.

The technology was terrific. The price was not tenable in the market.

How much will it cost to get to market?

In our experience, this is a tough question for one major reason: you don’t know what you don’t know.
Whenever a technology is being developed, there always seems to be things that will crop up that were unexpected and not accounted for in the first analysis. Many times, these surprises are mitigated by unexpectedly good outcomes but not always.

There’s an old saying in R&D: Everything takes twice as long and costs twice as much as you expect.

Keep that in mind when analyzing the potential costs to get your technology to market.

What are the likely successor technologies and what will they mean to your product?

The vacuum tube was replaced by solid state technology. Dial phones were replaced by push buttons. Analog TV is being replaced by digital.

Every product has a life cycle. The graph below illustrates this:

How long do you have until a successor technology replaces the one you are commercializing, and how much can you expect to make it the window that you have?

Once these questions are answered, and once the questions these questions raise are answered, you can answer the biggest question of all: does it really make sense to commercialize this product?

In future installments, we will look at some additional activities and analyses that may need to be done, followed by some discussions on trademarks and copyrights.

Spaghetti . . . and blankets

2012-01-17T06:00:00.000-08:00

If you’re from a certain small town in the Northeast and work for ReMax, there's a good reason why you might have trouble getting ahold of someone at Enable IPC . . .

We get a lot of calls from companies peddling "stock promotion services". Maybe we will expound on these scams in future blog posts . . .

Anyway, these callers stood out from the others for two particular reasons: 1) they called a lot -- much more often than the usual suspects -- and 2) their phone number always came up on the callerID feature as being from ReMax Real Estate.

So, in this town, there was (apparently) a ReMax office where one could walk in and buy or sell a house, and at the same time sign up for promotion services for a micro cap stock: a couple of very dis-similar offerings.

It reminded us of a routine by one of our favorite comedians. Mitch Hedberg once said that he wanted to be a McDonald’s franchise owner who didn’t participate in company promotions; when people asked if he had cheeseburgers, he would respond, “Nope! We've got spaghetti – and blankets.”

Anyway, some of these "ReMax" callers were belligerent, some were friendly, but the common denominator among them all is that they wanted money or, preferably, shares to "promote" Enable IPC's stock. And, for quite some time, it seemed they wouldn’t stop calling. So, we finally stopped answering calls from ReMax that came in from that particular area code.

We don’t do artificial stock promotion for a number of reasons; chief among these is that none of us look good in orange jump suits and we love our freedom. But, more than that, it is simply immoral to conduct activities that artificially inflate the stock price; the stock price should reflect the market value of the company. The playing field should be level and the players should be on the up-and-up, so to speak.

That being said, there is (in our opinion) a lot wrong with the way the micro cap market is managed and some of the rules make absolutely no sense to us. But, artificial promotion is, essentially, fraud (again, in our opinion) and we are not going to participate in that.

Some day we will visit this town in the Northeast again (we’ve been there a couple times; it’s a nice place). When we do, perhaps we will look for the local ReMax office and drop in to see exactly what is going on there. It might prove to be an interesting visit.

Commercialization -- The Selection of IP -- Part 13 in our Series on IP and Patents

2012-01-12T06:00:00.000-08:00

This is the thirteenth in a planned 20-part series of articles on intellectual property. In future posts, we will explore product commercialization.

In this posting, we will provide a discussion on the selection of IP. What should you look for in determining whether certain intellectual property makes sense to pursue for commercialization?

Earlier this year, the US Department of Energy (DOE) held a patent clearance sale.

Yes, you read that right – the DOE had a sale on its intellectual property (IP) portfolio, offering licenses to patents they had for the low, low price of $1,000.

The DOE runs 21 labs and technology centers (that are listed on the energy.gov website) whose primary job is to advance science and the defense and economic leadership position of the country. These research centers have produced over 15,000 patents for the DOE, but apparently only about 10% of those had been licensed to industry. So, the DOE launched a campaign that portrayed those technologies, in a tongue-in-cheek way, as though they were having a massive clearance sale, and these technologies were just sitting there, waiting to be adopted like pets at an animal shelter, only quite a bit more expensive and requiring a lot more work!

Where Does One Find Technologies?

National laboratories seem to pump out technologies at a high rate, and so do universities. Most of the larger universities have commercialization arms which are established to license technologies developed and owned by the institution.

One of the oldest and most active of these is WARF – the Wisconsin Alumni Research Foundation, which is established to partner with industry to license technologies developed at the University of Wisconsin. There are many others, however, and they go by varying names. They are usually called their Technology Transfer office, but may also be found online under “Research”, “Commercialization”, “Industry Partnerships” or some other moniker.

A couple years ago, Enable IPC quietly researched over 300 universities in the US that had active engineering programs and found that about 80% of them had established such offices, and most of the other 20% seemed to think that establishing an office was important to do, but they simply hadn’t gotten around to it yet.

All this research, plus the corporate research and individual inventor activity, has combined to deluge the US Patent and Trademark Officer (USPTO) – they received nearly a quarter of a million utility patent applications from US filers in 2010 alone (over half a million when foreign filers, and design and plant applications are included in the total). And, past blog postings on this site have discussed the USPTO’s backlog.

There are a lot of ideas being protected. The key is to find the ones that are worth investing in.

Determining the Right Idea

Finding the right concept to pursue is easier said than done. It takes a lot of work and a lot of objectivity. But, put simply, one needs to analyze a couple of very important things right off the bat:

Review the technology against the current state-of-the-art and what’s likely to come

No one has a working crystal ball. It’s tough to see into the future and determine what the competition might be working on, or what it may have up its sleeve. But, that’s part of the risk. And it needs to be taken seriously and objectively.

Objectively analyze the assets and risks of the technology

What is the real advantage of the tehcnology? Is it protected under the patent being licensed? If not, can it be protected and what will it cost to obtain that protection?

What can be gained by this technology? Are there work-arounds (i.e., can someone circumvent the protected idea)? If so, what hkind of head-start in the market can you expect to get while the competition is catching up? Once the competition catches up, what happens to your market share? Does it go down by 10%? 20%? 50%? Or worse, completely evaporate? Will the head start gained by the technology be enough to make this effort worth while?

The assets and potential success of the technology must be weighed against the risks. The likelihood of success needs to include an objective evaluation of the succeeding technologies – when will the technology be replaced by a new technology and what kind of profits can be realized in the meantime?

In future installments, we will look at some additional activities and analyses that may need to be done, followed by some discussions on trademarks and copyrights.

An Overview of Commercialization -- Part 12 in our IP and Patents Series

2012-01-05T05:00:00.000-08:00

This is the twelfth in a planned 20-part series of articles on intellectual property. In future posts, we will continue to explore product commercialization.

In this posting, we will provide an overview of commercialization – what it means and how it’s done.

What is Commercialization?

Probably the best definitions for the term “commercialization” (at least, the best that we’ve found so far) come from two fairly different sources: the Intergovernmental Panel on Climate Change and the Legislature of the State of Michigan. We combined the two and came up with the following which, in our experience, exactly defines the term:

Commercialization is the steps taken in the transition of an innovative technology or process from research to a competitive product or service.

The commercialization steps will vary widely from technology to technology and from market to market.

For example, we have had experience taking a sensor that was hosted on an integrated circuit (IC) from a lab to market that involved little more than developing some expanding some IC technology (so more units could be processed in a single run) and building some electronics around it. We have had another experience where the commercialization involved taking an idea into a completely new design from scratch. One took a couple months; the other took several years, but both werre successful and could be considered part of the commercialization process because both involved taking the existing idea or technology and turning it into a real, viable product (as opposed to continuing some level of research).

What Does the Process Typically Involve?

Commercialization can involve the following initial steps:

an honest evaluation of the technology;
an honest evaluation of the potential market(s);

(we emphasized the word "honest" because it can be difficult to be objective about something that you've spent a long time developing; it can be hard to come to the realization that there is no market for an idea that you've spent a lot of time on . . .)

an evaluation of the steps that need to be taken to turn that intellectual property (IP) into a product (the idea may be great but the market may not be there; or the market may exist, but the idea might not properly address it; or the IP might be ready, the market might exist, but is may simply cost too much to get to market to make it a viable product);

If all the numbers add up and things look good, then there are additional issues that need to be dealt with:

is the money available?
are the personnel available?
are the facilities available?
is the equipment available?
is the IP protected and, if not, can it be protected (or should it be protected; on rare occasions, it may make more sense to keep something as a trade secret rather than pursue a patent)?

There are other questions to be asked, which can include:

how long it will take to get the technology commercially ready?
how will the resulting product or service be marketed, and who will do it?
what will the expected revenues and profits be?
and, importantly, will it be worth the effort?

If all looks good, then with the funding and resources secured, and with a plan in place, the commercialization activities can begin.

In future installments, we will look at some of the specific activities and analyses that may need to be done, followed by some discussions on trademarks and copyrights.

The Costs of Licensing -- Part 11 in our IP and Patents Series

2011-12-22T06:00:00.000-08:00

This is the eleventh in a planned 20-part series of articles on intellectual property. In future posts, we will explore product commercialization.

In this posting, we will provide an overview of the costs of licensing a technology.

A license is an agreement that allows the licensee to use a technology for some purpose – usually to create products based on the technology, in exchange for a license fee and/or a commission on revenues.

In other words, the licensee will take the idea and turn it into a viable product or otherwise create some kind of revenue stream off the technology. The inventor will then see a portion of those revenues under the terms of the license.

There are several types of costs a licensee can expect to encounter associated with the license agreement. These costs are separate from attorney’s fees.

Initial license fee

There will typically be an initial license fee which is designed for several reasons, not the least of which is to separate the wheat from the chaff. The licensor needs to be able to determine which licensees are serious and the quickest way to determine the seriousness of a potential licensee is to demand a check up front, with the agreement.

The initial license fee will vary depending on a number of factors, including:

Exclusivity / non-exclusivity
Field(s) of use
Market size and
Likelihood of attaining X% of market

Royalties

On-going fees will usually consist of royalties on sales of products based on the licensed technology. These are usually paid periodically (e.g., quarterly or annually) and their amount will depend on a number of factors, including:

Exclusivity / non-exclusivity
Field(s) of use
Market conditions

Typical royalties can vary from just a couple percent to 10% or 15% depending on the above factors and other influences. Royalty rates are published and periodically updated by some and are available in book form and on websites, paid and unpaid. While it is good to have an understanding of the market rates, however, the bottom line will be the potential market, the potential profits and the type of license agreed to.

Lump sum payment

Sometimes, in lieu of initial license fees and royalties, the parties might agree to a lump sum payment to transfer the rights of a technology. In our experience, this is not a common as a royalty arrangement, but it certainly exists.

Typically, a present value calculation is made, using certain assumptions relating to anticipated sales, profits, opportunity costs, etc. over the likely term of the license and a value is established.

Patent cost reimbursement

When a licensee is negotiating for exclusivity, many times that licensee will be expected to reimburse the licensor for the fees and expenses relating to the patent. Sometimes, non-exclusive licensees will be required to pay for a portion of these costs.

These are some of the costs that could be part of a license agreement. Keep in mind that this is not necessarily a comprehensive list -- other costs may be considered, depending on the type of license, technology and the terms.

Details on commercialization activities will be addressed in upcoming installments.

Congress Does Something Right: the SBIR Program is Reauthorized

2011-12-16T14:00:00.000-08:00

What do  Symantec, Qualcomm, Genentech, DaVinci, iRobot and Enable IPC all have in common?

They have each benefited greatly from the US government's Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

Congress did a wise thing yesterday: they reauthorized the SBIR and STTR programs -- and even allowed for some expansion -- through 2017.

These programs, which began in 1982, provide funding for innovative ideas and products that can be used by the US government and/or for the direct benefit of its citizens -- e.g., military innovations, cures for diseases, advanced medical equipment, energy breakthroughs, etc.

In an age where Congressional approval hovers around 12% (and disapproval over 80%, according to the website Real Clear Politics), SBIR and STTR are examples of the US government doing something right.

The idea is simple, and has been wildly successful: various government agencies identify needs they have, or needs they have seen in their respective areas. Small businesses with ideas relating to the issues then submit proposals, which can turn into solutions for the government and products for the small business (e.g., the National Institutes of Health might provide funding for a small business that has a breakthrough in biomarkers for the early detection of cancer; or the Department of Defense might provide funding for a small business that has developed a lighter battery pack for soldiers).

Providing a relatively small amount of funding to develop these ideas is good for the government, which can then use them to its benefit, and it's good for the economy, because these ideas can become commercialized to benefit society as a whole.

Here's a good example: several years ago, the Department of Defense and the National Science Foundation provided about $1.5 million through several SBIR programs to a small company.  That company, Qualcomm, now has 17,000 employees and a market capitalization of $80 billion (read more about it here).

Symantec, with 17,500 employees in 40 countries, also started with an SBIR grant. iRobot started with SBIR funds from the Department of Defense. SBIR success stories involving these companies, as well as Genentech, DaVinci, Balfour Technologies, Martek Biosciences and many others can be found at http://www.sbir.gov/success-stories.

Here at Enable IPC, we have experienced the programs' success first hand as well. SolRayo, Enable IPC's subsidiary, recently completed work under a Phase I STTR award and has applied for a Phase II. The award could lead to a major breakthrough in battery technologies.

The formula for SBIR/STTR awards is simple. The government uses experts to analyze proposals and suggest awards for a proof of concept or initial investigation to determine its feasibility -- this is designated as "Phase I".  If the Phase I effort is successful, awardee can apply for additional funds under "Phase II" to bring the idea to commercialization.

The SBIR and STTR programs had been on life support, funded by short-term extensions for the past several years, until yesterday when Congress passed a full reauthorization through 2017. They also have provisions allowing for the expansion of the programs over the course of the reauthorization.

So, let's recap: a program that benefits everyone has been reauthorized through 2017 by Congress and even expanded a little.

It sounds like they actually can do some things right after all!

Read more about this in an opinion column at CNBC.com written by Rep. Sam Graves, Chairman of the House Small Business Committee: http://www.cnbc.com/id/45697983

Sub-licensing, Audits and Other License Attributes - Part 10 in our IP and Patents Series

2011-12-15T06:00:00.000-08:00

This is the tenth in a planned 20-part series of articles on intellectual property. In future posts, we will explore licensing costs and commercialization of products.

In this posting, we will provide an overview of some additional facets of licensing agreements: including sub-licensing rights, auditing rights, early termination penalties and more.

A license is an agreement that allows the licensee to use a technology for some purpose – usually to create products based on the technology, in exchange for a license fee and/or a commission on revenues.

In other words, the licensee will take the idea and turn it into a viable product or otherwise create some kind of revenue stream off the technology. The inventor will then see a portion of those revenues under the terms of the license.

Sub-licensing

Many licenses allow the licensee to sub-license the technology to another entity. This can be useful in many circumstances; for example, where the licensee may want to take advantage of the use of distributorships or other means to market.

Sub-licensing will generally only be permitted within the field(s) of use of the license and the licensor will maintain the same royalty structure as in the original license agreement. So, if the licensor was being paid a 5% royalty on sales, the licensor will still be entitled to that royalty, despite whatever was negotiated between the licensee and sub-licensee.

Auditing

The licensor will almost always have the right to audit the licensee’s books (or have them audited by a reputable firm) to ensure that the licensee is paying the appropriate license fee.

As part of this effort, the licensee will be required to maintain appropriate records of sales as a condition of maintaining the license.

Early termination

There are usually clauses for early termination in the event that the licensee fails to perform or if the market doesn’t materialize as planned. The circumstances surrounding an early termination may, or may not, require the licensee to pay an early termination fee.

Other aspects of licensing

Most license require periodic reports (quarterly, semi-annually or annually) detailing and research efforts related to the licensed technology, the marketing effort, the number and amount of sales, etc. These reports are designed to ensure the licensee is taking all appropriate actions to maximize sales of the licensed technology.

The license may also require that the product being sold is marked with the patent number(s) and/or other identifying marks that indicate the IP behind the technology is protected.

Licenses, as one can see, can contain a number of articles unique to the situation the licensors and licensees find themselves in. As such, it is always good practice to consult an attorney that specializes in IP protection and licensing prior to negotiating a license agreement.

Additional details on a typical license fee structures and commercialization activities will be addressed in upcoming installments.

The License Term and Performance Milestones -- Part 9 in our IP and Patents Series

2011-12-08T06:00:00.000-08:00

This is the ninth in a planned 20-part series of articles on intellectual property. In future posts, we will explore additional aspects of licensing and commercialization of products.

In this posting, we will provide an overview of two more facets of licensing agreements: the license term and milestones.

A license is an agreement that allows the licensee to use a technology for some purpose – usually to create products based on the technology, in exchange for a license fee and/or a commission on revenues.

In other words, the licensee will take the idea and turn it into a viable product or otherwise create some kind of revenue stream off the technology. The inventor will then see a portion of those revenues under the terms of the license.

In this post, we will look at the license term and milestones. In upcoming posts, we will discuss other important license factors.

License term

The term of the license agreement can vary widely. The license could be in effect for just a few years or for the life of the patent. The decision to assign a term other than the life of the patent comes down to the expected useful product life cycle.

The useful product life will vary widely from product to product. The product life refers to the entire product cycle, from invention to the product’s replacement by a successor technology. A good example of a complete product life cycle is the vacuum tube used in old radios and televisions. Those of us of a certain age can remember going to the local store with a bag of tubes and using the tube tester to see which one(s) needed to be replaced.

The vacuum tube was invented in the early 20th century, but it enabled the explosive growth of electronics that was to come in subsequent years. The tube was used in early radios and, as the radio was popularized as an entertainment medium during the 1920s and 30s, the vacuum tube market exploded as consumers bought and maintained radios. During the 40s, the growth began to level off at a healthy rate as the market matured.

With the advent of the semiconductor, however, and despite the explosive growth of television in the 1950s and color TVs in the 60s, the vacuum tube saw decline in demand. By the 1960s, most radios and TVs were solid state.

So, when thinking about a license term, what needs to be asked is: how long will it be before a successor technology is likely to replace the licensed product? Is it worth licensing the technology for the life of the patent (or as long as the technology can be protected), or should the license be limited to a shorter period of time?

The key is to not get stuck with a longer term than is needed; conversely, one doesn’t want to obtain too short of a term get too short a term or the licensee could risk having to re-negotiate the license at the height of the product demand, when the licensor could dictate terms more favorable to him.

Milestones

Most licenses have built in performance milestone requirements. These are generally put in place to protect the licensor from, say, a competitor licensing the technology, effectively tying up the technology and preventing its introduction in the market.

The usual terms dictate that certain monthly, quarterly or annual sales levels are to be met or certain minimum royalties are to be paid. For example, the deal may call for royalties of 5% on sales revenues. If the licensor expects the licensee to produce at least $100,000 in sales during a quarter, he would likely require a minimum quarterly royalty of $5,000 be paid. So, if the sales are, say, $200,000, the licensee is required to pay 5% (or, $10,000) to the licensor. But, if the sales are only, say, $50,000, the licensee still must pay the minimum $5,000 royalty.

In this way, the licensee is motivated to make the sales level or risk paying a royalty despite a lack of sales and the licensor is assured that the licensee is motivated to make sales.

Additional details on a typical license and its structure and terms will be addressed in upcoming installments.

Some interesting patent statistics . . .

2011-12-06T12:29:00.000-08:00

Our IP attorney, Dr. Gary Schnittgrund, was checking on some outstanding patent activity we have dating back to September 2009. We've received no word from the US Patent and Trademark Office (USPTO) since they acknowledged they received our application over 2 years ago.

In Gary's email to me, he also forwarded some interesting data and a link to a blog post[1] which published the following information:

As of October 2011, the USPTO had 700,000 applications under review and a backlog of over 1 million more; by comparison, other reports state that in 1998, the backlog was a little over 100,000; by 2002, it was 350,000; and by mid 2009 it was 770,000 [2]
The average time from the filing of a patent application to when the first office action is mailed from the USPTO is 26.9 months
The average time from patent filing to final disposition (i.e., grant or denial of a patent): 33.9 months; to compare, reports state that in 1998 this process took about 18 months [3]

Of course, these numbers can vary widely depending on the type of patent application; for example, another report claims that simple design patents may only take a little over a year for the first office action, while utility patents relating to "interprocess communications" can take nearly four years. [4]

Now, Congress and the Obama administration recently passed legislation aimed at solving this issue (we've had some blog postings about this legislation [for example: click here]; we weren't that crazy about certain aspects of the legislation because it wasn't favorable to small businesses and individuals, in our opinion). According to the blog post Gary sent us, the USPTO is working on reducing the time from application receipt to first action to 10 months, and the time to the grant of a patent down to 20 months, both by 2015.

We think we should watch the USPTO closely over the next few years and see if the changes passed by our leaders actually help the situation. We certainly hope it does.

For reference:

[1] Patent Pipeline blog posting

[2] Invention Statistics Patent Office Backlog blog posting
[3] Ibid.
[4] patentlyo.com blog posting

Exclusivity and Fields of Use -- Part 8 in out IP and Patents series

2011-12-01T06:00:00.000-08:00

This is the eighth in a planned 20-part series of articles on intellectual property. In future posts, we will explore additional aspects of licensing and commercialization of products.

In this posting, we will provide an overview of two of the many facets of licensing: exclusivity and fields of use.

A license is an agreement that allows the licensee to use a technology for some purpose – usually to create products based on the technology, in exchange for a license fee and/or a commission on revenues.

In other words, the licensee will take the idea and turn it into a viable product or otherwise create some kind of revenue stream off the technology. The inventor will then see a portion of those revenues under the terms of the license.

License terms can vary widely and can encompass many things, all of which can be very important to the parties involved. In this post, we will look at exclusivity and fields of use. In upcoming posts, we will discuss other important terms.

Exclusive vs. non-exclusive

One of the more important aspects of licensing is the question of exclusivity – that is, whether there will be one licensee or several.

To the entity granting the license, factors in deciding whether to grant exclusivity will include the capability of the licensee to penetrate the markets, agreed-to minimum sales, the size of the market and other factors. For example, if a technology is going to address a multi-billion dollar market covering multiple applications, several licensees might be in order. However, for a much smaller market, the licensor might want to limit the licensees to one or two companies.

The licensor will not want too few licensees or he may not be adequately covering the potential market. However, the last thing either party wants is for there to be so many licensees that many are not successful, or the market is poisoned or confused.

To the licensee, exclusivity is important from a competitive standpoint – they will want the market to themselves. But, they will need to understand that, if the licensor is willing to consider exclusivity, the license fees will be higher and the licensee might be expected to pay the patent costs.

So, it becomes a negotiation that takes into account the size of the market, the penetration ability of the licensee and the willingness of the licensee to pay a premium for the exclusivity as well as meet certain performance goals to maintain the exclusivity.

Exclusivity can take on several forms, however. They do not necessarily have to grant exclusivity or non-exclusivity for all applications or areas.

Fields of use

Licenses will typically define fields of use. The fields of use might be geographic, application-based a combination of the two.

The person granting the license might want someone with experience in certain fields to concentrate on those areas of expertise and leave other areas to more qualified people. The licensee might also be interested in using the technology in a certain area, as opposed to all areas.

For example, let’s say a company is licensing a new kind of battery. The company might be granted exclusivity for all applications in all areas throughout the world, or just for, say, batteries used in cell phones in the United States.

Or the license could be granted for exclusivity in one or more fields and non-exclusivity in others. For example, the battery licensee might have exclusivity for cell phones and non-exclusivity for batteries used in automobiles.

The license could also prohibit one licensee from participating in a certain application. For example, a license could be exclusive in cell phones, and non-exclusive in all other fields of use except power tools, where a license may not be granted (or where someone else may have exclusivity).

Also, there could be strictly geographic limitations. The licensee might have exclusivity in, say, Los Angeles County, non-exclusivity in the rest of the state of California, and be prohibited from selling in other areas.

Or the license could be a mixture of these factors.

It is important for both parties to understand and consider the market size and conditions, the experience and reach (or lack thereof) of the licensee and the expected impact in the various applications and geographic areas of the technology when deciding on the number of licensees and the granted fields of use.

Additional details on a typical license and its structure and terms will be addressed in upcoming installments.

An Overview of Licensing -- Part 7 in our IP and Patents Series

2011-11-17T06:00:00.000-08:00

This is the seventh in a planned 20-part series of articles on intellectual property. In future posts, we will explore additional aspects of licensing and commercialization of products.

In this posting, we will provide a brief summary of licensing – what it is, who grants the lcienses and what licensees can expect, generally.

What is licensing?

Licensing allows someone else to use a protected idea; that is, a license is an agreement that allows the licensee to use the technology for some purpose - usually to create products based on the technology - in exchange for a license fee and/or a commission on revenues.

In other words, the licensee will take the idea and turn it into a viable product or otherwise create some kind of revenue stream off the technology. The inventor will then see a portion of those revenues under the terms of the license.

The license will typically have some level of restrictions on it; for example, it may allow the licensee to use the licensed technology in certain applications, or geographic areas. In addition, it might be exclusive to one licensee or there may be multiple licensees for a given technology.

Who grants licenses?

The person or organization who grants the license is the one who has the rights to the protected technology, usually through a patent or an active patent application.

Licensing can be a major source of revenues for inventors, research and development facilities, etc. In fact, most major universities, and many smaller ones, have departments solely committed to licensing and related activities. They can go by several monikers, including “Technology Transfer” or “Commercialization” or something else, but what they do is generally the same thing: take technologies created at their institution and provide the rights to those technologies to companies or other licensees so some money can be made off the idea.

One of the largest, and most successful, licensing organizations is the Wisconsin Alumni Research Foundation (WARF), based in Madison, WI. This is the licensing arm of the University of Wisconsin. WARF was established over 80 years ago as a patent management agency. Their first license agreement was with Quaker Oats for a process involving vitamin D in cereals. The license arrangement allowed WARF to control which companies received licenses to the new process. This ensured that the process was not abused and that profits on the process would be shared with the University.

What about the licensee?

As alluded to earlier, the licensee will typically be required to pay license fees, usually determined by royalties on sales or some other commission-type structure, and could also have milestones that it will be required meet in order to maintain the license.

Details on a typical license and its structure and terms will be addressed in upcoming installments.

The Patent Process - Part 6 in our Patents and IP Series

2011-11-10T06:00:00.000-08:00

This is the sixth in a planned 20-part series of articles on intellectual property protection. In future articles, we will also explore licensing and commercialization of products in later posts.

In this article, we will provide a brief summary of the patent process – what is involved and what to expect.

Assuming you need to file a utility patent (the most common type), the first thing you should do, in our opinion, is contact a qualified patent attorney or agent. Patent laws are complex as is the filing process, and a good patent attorney or agent will know the intricacies involved and ultimately save you from making mistakes and missteps that would cost you money, time and possibly jeopardize your invention.

The process that a good patent attorney or agent will walk you through, will include the following:

International protection?

Getting a patent in the United States means you have patent protection in the United States. However, in and of itself, a US patent grants no protection in other countries.

The Patent Cooperation Treaty (PCT) established a union, which now includes most of the world’s nations, for “cooperation in the filing, searching, and examination, of applications for the protection of inventions.”[1] The PCT reserves the right to file a patent in any of the 140+ countries that are members of the union, for a specific period of time.

By filing a PCT application you are giving yourself time to consider which additional countries you might want to file in as well.

Provisional application?

One way to get a fast priority date and save money in the short term (but maybe not the long term) is to file a provisional application. This consists of a “filing without a formal patent claim, oath or declaration, or any information disclosure (prior art) statement.”[2]

These are easier documents to file, can generally be filed faster and will ensure that the priority date is as early as possible.

One of the good things about provisional applications is that it delays the need to submit a full application for 12 months, while protecting the priority date. That will give you time to put together a good, solid complete application and to consider whether your invention is worth patenting and protecting for 20 years.

One of the bad things about a provisional patent is that it does not allow for any new matter on the invention. So, if something comes up during the year that would apply to the invention, it cannot be added to the provisional application. In addition, while it is less expensive to file a provisional application, and will generally cost less attorney’s fees to prepare and file, at the end of the day it will probably cost more in attorney’s fees to file the provisional, plus the full application later than if you just bit the bullet and filed the full application to begin with.

Other things to consider

There are some other things to consider, such as an expedited application, which your attorney or agent can discuss with you. Once the application is completed and filed, the US Patent and Trademark

Office will send an acknowledgement that it received the application. After that, it becomes mostly a waiting game.

An examiner will eventually analyze the application and will respond with an office action. At this point, the inventor and the attorney or agent will need to respond to the office action.

If the patent is allowed, the applicant needs to pay the issue and publication fees, as well as any maintenance fees in the future. If the patent is not allowed, the applicant may still be able to request a reconsideration or appeal.

In summary, the single best piece of advice we can give is to contact a good patent attorney or patent agent. In our opinion, the best way to find a good patent attorney or agent is to seek out the recommendations of colleagues.

In our next installment, we will discuss an overview of patent and intellectual property licensing.

[1] The PCT’s website can be found here: http://www.wipo.int/pct/en/
[2] http://www.uspto.gov/patents/resources/types/provapp.jsp

Patent Basics - Part 5 in our Patent and IP Series

2011-11-03T06:00:00.000-07:00

This is the fifth in a planned 20-part series of articles on intellectual property protection. In future articles, we will also explore licensing and commercialization of products in later posts.

In this article, we will provide a brief summary of the basics of a patent – what it protects, what kinds of patents are available and how it is comprised.

The US Patent and Trademark Office (USPTO) determines and issues patents in the United States.

There is a ton of information on patents at their website: http://www.uspto.gov, as well as many other sites, which are run by patent attorneys and other experts. For detailed information, we encourage you to read those sites as well.

Contrary to what you might think, a patent (in this case, we are discussing a utility patent) does not grant someone the right to make or use or work on an invention, but rather, it prohibits others from infringing on the patent. The law then defines infringement as when someone, without the proper authority, “makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent.“[i] The “term” of the patent begins at the filing date, which is the date the USPTO receives a proper application.

There are three kinds of patents:

Utility patent – this is the most common type of patent and can be issued “to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof”[ii]. A utility patent term is 20 years from the filing date.
Design patent – protects the appearance of something. A design patent generally consists of multiple drawings and is used to prevent someone else from making something that looks the same. In other words, from a very basic perspective, the design patent protects how something looks, while a utility patent protects what it does. A design patent term is 14 years from the filing date[iii].
Plant – this is a patent that protects plants – the kind that you find in a garden. It can be issued to someone to protect a new kind of plant they have developed.

Utility patents have several elements, principally[iv]:

Utility Patent Application Transmittal Form or Transmittal Letter
Fee Transmittal Form and Appropriate Fees
Application Data Sheet (see 37 CFR § 1.76)
Specification (with at least one claim)
Drawings (when necessary)
Executed Oath or Declaration
Nucleotide and/or Amino Acid Sequence Listing (when necessary

All these have to be presented to the patent office with proper information in a certain way, which is why you really should hire a professional, qualified patent attorney or agent to prepare and file your patent. Otherwise, you can cause delays in your application and possibly even lose your opportunity to file.

In our next installment, we will discuss the patent process, the time required and costs.

[i] US Patent Act, 35 U.S.C. 271(a), which can be found at: http://www.uspto.gov/web/offices/pac/mpep/documents/appxl_35_U_S_C_271.htm

[ii] http://www.uspto.gov/patents/index.jsp

[iii] Per 35 USC 173 http://www.uspto.gov/web/offices/pac/mpep/documents/1500_1505.htm

[iv] http://www.uspto.gov/patents/resources/types/utility.jsp#non

New Inventions and Ideas: Decision Time - Part 4 in our IP and Patents Series

2011-10-27T06:00:00.000-07:00

This is the fourth in a planned 20-part series of articles on intellectual property protection. We will focus on patents, but we will have some limited discussion on trademarks and copyrights as well. We will also explore licensing and commercialization of products in later posts.

You have an idea, you’ve conducted a preliminary search on Google and the patent office (USPTO) website, and it appears your idea might be original. You have a written record of the idea, and you’ve even discussed it with some experts under an NDA. You know you have to move quickly, so you’re ready to call the attorney.

But, before you do, you might want to consider the following final things:

Maybe just keep it a secret . . .

What is the reason you are doing this? Now, 99 times out of 100 the answer is obvious – to protect yourself against those who would steal your idea and protect your technological and market advantage.

However, there are some rare times when you might not want to file a patent. Rather, you might want to keep something a trade secret. The idea here is simple: patents are disclosed to everyone. The secret formula you have protected through the patent office will be published for all to see, and could conceivably tempt your competitors to find ways around your idea. It would likely even give them clues as to how to go about their nefarious activities.

But, if you kept your idea a trade secret instead, your competitors may have no idea how you maintain your advantage. Also keep in mind that patents have limited lifespans (long - 20 years - but limited, nonetheless). At the end of the term, the protection the patent afforded goes away.

A trade secret, however, could be protected for as long as those who know about it keep their mouths shut.

And, before you dismiss the idea, consider that the formula for Coca Cola is a trade secret – and has been kept for over 125 years.

Like I said, 99 times out of 100, it’s best to get the patent, but that doesn’t mean one shouldn’t consider the trade secret route.

Is there a product here?

Let’s say you received a patent for a method of growing fingernails on apples. It may be innovative, and no one may have done it before, but is there a market for such a product?

If there is no market that you can see, perhaps there might be one in the future. You need to think to yourself, how far in the future are you thinking about? Remember, the life of a patent is 20 years.
Or, maybe you want the patent for other reasons – a feeling of accomplishment, for example, or to improve the perceived value of a company. Then, it might be worth it to you to spend the time and money to acquire the patent.

How much?

If a patent is going to cost you $10,000 or $50,000 or more, you need to consider whether it is worth the expense. Does the issuance of a patent provide more in its return to you than it will likely cost? Will it mean enough of a market share to make it worth your while? Or will it produce enough in gaining the confidence of potential customers to drive them to a purchase decision?

Once these considerations are dealt with, and the decision is made to apply for a patent, it’s time to scope out patent attorneys.

In part 5, we will begin to discuss the specifics of the patent process.

New Inventions and Ideas: Notebooks, NDAs and Obama - Part 3 in our IP and Patents Series

2011-10-20T06:00:00.000-07:00

This is the third in a planned 20-part series of articles on intellectual property protection. We will focus on patents, but we will have some limited discussion on trademarks and copyrights as well. We will also explore licensing and commercialization of products in later posts.

You have an idea, you’ve conducted a preliminary search on Google and the patent office (USPTO) website, and it appears your idea might be original, indeed!   Congratulations!

There are a few more things to consider before deciding it’s time to call a lawyer and start the patent process. You should move quickly, however – and you will understand why after you’ve read this post:

Is it yours?

Do you really own the idea? Many times, employers have policies that state that employee inventions are the property of the employer, not the employee who came up with the idea.

It's best to review your employer's policies, even if you invented the thing on your own time, in your own garage, and even though the invention may have nothing to do with your employer's field of operations.

If your employer has a policy regarding ownership of inventions while you are employed there, and you feel that you should have ownership of this idea despite the policy, you might want to review your situation with a competent attorney before proceeding.

Did you have any help?

Are there others who might have contributed to the idea? If so, they may need to be listed on any patent and you will need to get their cooperation.

If there are questions of ownership, contact a competent patent attorney. And, when you speak with the attorney, be open, honest and tell them everything so you can get some good advice. Then do yourself a favor, and follow the advice the attorney gives.

Written record

Engineers are supposedly taught early on that they need to keep notebooks. These notebooks are records of their efforts.   They are meant to record, in sequential time, the engineer’s ideas, inventions, experiments, and possibly their musings and other data.

The notebooks should be bound so pages cannot be added, and pages should never be removed. Whatever is written should be in ink and not erased. Every page should be numbered and have the date and time recorded and any record of any invention should be signed and witnessed.

Having said that, I know of only a few engineers who actually do this. That is sad, because properly keeping a notebook can be extremely helpful in a number of ways -- from simply staying organized to defending legal challenges to patents that bear the engineer's name.

So, when you have an idea, write it down in your engineer’s notebook. If you don’t have one, consider starting one. At any rate, write the idea down, in as much detail as possible, and have someone witness and date it. In addiiton, save receipts from purchases of things you bought to test out the idea.

Now, proving that you invented something on a certain date has recently lost some of its power (as you will see later in this posting) but it can still provide multiple benefits.

A quick discussion about NDAs

As we mentioned in the previous post, there are actually some good reasons why you may not want to tell anyone about the idea, but to some degree, that’s just impractical. This is why the lawyers have given us the non-disclosure agreement (NDA).

A NDA is an agreement between two parties: the disclosing party (i.e., the guy with the idea) and the recipient (i.e., the guy who’s hearing about the idea). The NDA usually binds one or both parties from revealing the idea to anyone and can also be used to ensure that the recipient of any confidential information can only use the information for certain purposes.

For example, let’s say you invented a better battery and you wanted to take your idea to Duracell to see if they wanted to give you a ton of money for it. You might want to sign a NDA ahead of time with Duracell, making sure that the agreement stated that Duracell (the recipient of the information) could use the idea only to evaluate its business potential and could not use it to compete with you in any way.

You can find a lot of information about NDAs online, but when you reach the point where you will be discussing the idea with a company, it is always smart to hire a qualified attorney to review and/or provide an NDA ahead of time so you can be sure you are protected. And you should do this whether you have a patent flied or not.

Thank you, Congress and President Obama

In September 2011, Congress passed, and President Obama signed, a patent reform act which, among other things, changed the procedure from “first to invent” to “first to file.”[1]

What this means is, you may have an invention, but if someone beats you to the patent office, you are out of luck, even though you may have had the idea before the other person.

This was meant to help streamline the patent process (which has a lot of issues, as you may see in future postings), but many complain that the "first to file" law might harm small businesses and individuals who lack the wherewithal to quickly get patents on file and, therefore, run the risk of being beaten to the punch by corporations with more resources.

So, once you’ve decided to secure a patent, it behooves you to move quickly.

In part 4, we will discuss the things to consider before moving forward with the patent process.

[i] http://www.foxbusiness.com/industries/2011/09/16/obama-signs-patent-reform-bill/

New Inventions and Ideas: Ask; Don't Tell - Part 2 in our IP and Patents Series

2011-10-13T06:00:00.000-07:00

This is the second in a series of articles on intellectual property protection. We will focus on patents, but we will have some limited discussion on trademarks and copyrights as well. We will also explore licensing and commercialization of products in later posts.

OK – so you’ve developed a better mousetrap. You have an idea – and it’s a great idea – but, speaking of ideas, you really have no idea what to do next.

Actually there are several things you will want to do. Here are three of them – we’ll add some more in future posts:

Is it ready?

You don't have to have the idea in the form of a product yet, but it needs to be fleshed out enough so you can describe it suffuciently so that someone who is knowledgable in the area can make and use it.

Do a search (i.e., ask)

Conducting a search on your idea is probably the best, first step to seeing where you stand. Sometimes, a search will reveal that someone has already thought of your idea and, thereby, save you a ton of time and money. Try Google and, if you don’t find anything, try some keywords at the US Patent and Trademark Office (USPTO) website (http://www.uspto.gov). If there are other appropriate places you know of to search (e.g., industry websites, magazines, etc.), search there as well.

If you don’t find someone already working with your idea in your initial search, then you can feel free to continue. However, even if your search turns up nothing, you will still need to hire a professional to conduct a more thorough search down the road, when you are ready to prepare a patent application.

If you do find that there is someone else that has patented your idea, don’t despair too much. Many times, people come up an idea, but lack the passion, guts or commitment to see it through to a product. Perhaps you can make a deal with that person to license and commercialize the concept. We will discuss this in later installments of this series.

Keep your mouth shut (i.e., don’t tell)

There are actually a couple reasons why you may not want to tell anyone. In September 2011, President Obama signed a patent reform bill into law.[i] One of the things this law does is changes the grant of a patent from “first to invent” to “first to file.” That is, you could invent something first, but the first person to file the idea with the patent office will get the patent protection.

There is another reason as well. If someone hears of your invention and describes it in a publication, you have a window of opportunity to file, and that window will begin to close with the date of publication. The US Patent and Trademark Office generally will not allow a patent on an invention that has been “described in a printed publication . . . more than one year prior to the application for patent in the United States.”[ii]

So, it’s probably best to not tell anyone about your idea, if you can help it – at least until you are ready to file to protect your idea. If you do decide to approach a company or someone with a potential interest in your idea, consider first entering into a non-disclosure agreement (NDA). We will briefly discuss NDAs in a future installment, but in the meantime you can find out a lot about this by Googling it.

In part 3, we will discuss some additional, initial steps in protecting your idea.

[i] http://macdailynews.com/2011/09/16/obama-signs-first-to-file-u-s-patent-reform-bill-into-law/
[ii] http://www.uspto.gov/patents/resources/general_info_concerning_patents.jsp

New Inventions and Ideas: Available Protection - Part 1 in our IP and Patents Series

2011-10-06T06:00:00.000-07:00

This is the first in a planned series of articles on intellectual property protection and commercialization. We will focus on patents, but we will have some limited discussion on trademarks and copyrights as well. We will also explore licensing and commercialization of products in later posts.

You’ve created something new. Maybe it will save the world, or maybe it will just entertain people for a couple hours. But, it’s original and, therefore, worth something . . . at least, it’s worth something to you.

Congratulations! In many respects, our society is built on innovation.

The next thing you might want to do is contemplate whether to guard your work from someone who might want to steal, copy or otherwise use it and profit from it without your consent. You have some form of intellectual property (IP) and it probably needs to be protected.

That means you may need to make some decisions and take some action.

To know where to start, it’s best that we first understand some basics about IP types and how it is protected.

In the US, there are three kinds of protection available:

1. Patents – a patent protects the inventor from others who might make, use, offer for sale, or sell the invention.[i] Patents have kept others from duplicating the Toyota Prius hybrid car, the Sony Blu-Ray high definition technology and balloon-expandable heart stents invented by Johnson & Johnson (although all three of these examples were challenged in some way in court).

2. Trademarks – a trademark protects a word, phrase, symbol or design that is used to distinguish one source from another. For example, trademarks keep Pepsi from naming its product Coke (and vice versa), they prevent Burger King from naming its hamburger the “Big Mac” (in case it ever wanted to), and they prevent some guy who builds custom cars in his garage from naming his enterprise “Ford Motor Company”. Trademarks identify and distinguish the source of the goods of one party from those of others.

Patents and trademarks are processed at the US Patent and Trademark Office. There is a ton of information at their website: http://www.uspto.gov.

3. Copyrights – a copyright protects original works by one author from being copied by another. These include “literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture.”[ii]

Copyrights in books prevent outright plagiarism, as well as photocopying the work and using it without the permission of the copyright holder. This also applies to other forms of expression – not just the written word. As an example, the Happy Birthday song is copyrighted. Playing or singing the song in a public performance (private, not-for-profit performances are OK) can mean hefty fines – even the Girl Scouts were warned about paying a fee if campers sang it.[iii]

Copyrights are processed at the US Copyright Office. Its website can be found at http://www.copyright.gov.

In part 2, we will discuss the initial steps in protecting your idea.

[i] http://www.uspto.gov/patents/resources/general_info_concerning_patents.jsp#heading-2 At this link, you can find the following explanation: “The right conferred by the patent grant is, in the language of the statute and of the grant itself, "the right to exclude others from making, using, offering for sale, or selling" the invention in the United States or "importing" the invention into the United States. What is granted is not the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention. Once a patent is issued, the patentee must enforce the patent without aid of the USPTO.”
[ii] http://copyright.gov/help/faq/faq-general.html
[iii] http://abcnews.go.com/WN/story?id=5413561&page=1

If the US Were a Household . . .

2011-09-30T11:46:00.000-07:00

I heard this on the radio not too long ago. When you hear about the US economy, the national debt, etc., the numbers are staggering – and difficult to comprehend. Who thinks in terms of trillions anyway, except maybe macroeconomists and astronomers?

To get a handle on the current economic situation of the United States, let’s bring the numbers down to something we can deal with. We will compare the numbers to a household by lopping off a few zeroes. This may help us, in a very general way, understand our current economic situation.

If the US were a household, we would say it was bringing in $238,000 per year. Not bad at all.

The problem is, the household spends $355,000 per year -- $117,000 more than it brings in.

And, therefore, to sustain its lifestyle, the household has been borrowing (especially in the last several years) and, therefore, owes $1,460,000.

Ouch.

Yes, we need to cut spending drastically and yes, we need to raise revenue. And, it seems to me, we certainly need to pay down that debt.

That's easier said than done, of course.

Here are the numbers, which were pulled from several sources:

Total revenue in from all sources (individual tax returns, corporation income tax, employment taxes, excise, gift and estate taxes): $2.3 trillion (Source: Tax Stats at a Glance, US Internal Revenue Service; http://www.irs.gov/taxstats/article/0,,id=102886,00.html)

Total spending (mandatory [i.e., social security, medicare, Medicaid, unemployment, interest on the national debt]: $2.2 trillion; discretionary [i.e., Departments of Defense, Energy, Commerce, Labor, etc.]: $1.4 trillion): $3.6 trillion (source: US National Budget, A New Era of Responsibility, Executive Office of the President of the United States, Office of Management and Budget, p114 [year 2010]; http://www.gpoaccess.gov/usbudget/fy10/pdf/fy10-newera.pdf)

Total national debt: (publicly held: $10 trillion; privately held: $4.6 trillion): $14.6 trillion (source: US Dept. of the Treasury, Bureau of the Public Debt; http://www.treasurydirect.gov/NP/BPDLogin?application=np)

OTC Markets Releases New Data

2011-08-28T07:50:00.000-07:00

The OTC Markets Newsletter recently published statistics for securities that trade on the OTC Market. The OTC Markets seem to be growing, and the increases seem to be generally from quality companies, as opposed to “dark” or firms that do not provide much information. We compared the numbers from 2009, 2010 and the numbers as of 2011. The OTC Markets have several tiers:

OTCQX - the highest tier for companies that go through a rigorous review and meet certain financial standards. This group has more than tripled in size since 2009:

2009: 78 companies
2010: 159
July 2011: 246

OTCQB - for companies that are "reporting" to the SEC or a banking regulator and are current in their reporting requirements. This group (with the 2009 numbers combined between the OTCBB on Pink Quote and the OTCBB only) saw an increase last year, but has seen a slight drop so far in 2011:

2009: 3,390
2010: 3,851
July 2011: 3,716

The drop could be due to a number of reasons – for example, companies could have voluntarily decided to move to the pink sheets (to save money), or they could have been forced to do so due to failures in their reporting obligations, or they may have been promoted to a higher exchange, either within the OTC Markets, or to NASDAQ or one of the other exchanges.

OTC Pink Current Information - for companies that follow certain standards and make certain information available through the OTC Market's news and disclosure service. This group has risen steadily since 2009:

2009: 1,695
2010: 1,830
July 2011: 2,043

OTC Pink Limited Information - for companies that may or may not be troubled, but have not been current in reporting through the OTC Market's news and disclosure service. This group has remained at about the same number:

2009: 739
2010: 749
July 2011: 723

OTC Pink No Information - which includes "defunct companies that have ceased operations as well as 'dark' companies with questionable management and market disclosure practices." This group rose by a whopping 38% between 2009 and 2010, but has since leveled off.

2009: 2,445
2010: 3,375
July 2011: 3,355

RFID Applications - Part 3 in our RFID series

2011-07-26T07:30:00.000-07:00

Attaching an RFID tag to an object and incorporating that object into an RFID system, with a reader and software, can turn any object into a “smart” object, capable of communicating within the system. Long term predictions for these technologies include things like smart houses that know when you wake up in the morning, get your coffee ready for you and tell you you’re low on milk[1]; or smart shopping carts where you place what you want in a cart and walk out of the store, paying for your goods automatically when you exit.

While that sort of integration of RFID into our daily lives is years away, RFID technology is currently being used in many different industries and is expected to grow significantly in the next few years. The RFID tag industry is expected to see heavy growth in the coming years -- one third-party market research report forecasts a 14% Compound Annual Growth Rate and a total market value of $8 billion by 2014[2].

Part of the reason RFID technology is expected to see significant growth is due to its application diversity. RFID tags are used in dozens of applications in many different industries. In this section of our RFID series we will take a look at some of the wide variety of RFID uses:

Pharmaceutical companies can use RFID tags to track drugs and to verify authenticity throughout manufacturing and shipping[3]. This can help prevent fake drugs from entering their supply chains, helping to ensure drug safety to patients while allowing for much cheaper and much more efficient recalls when necessary.

Likewise, RFID can be used to track livestock from birth to retail sales. In fact, livestock tracking is predicted by British Research firm IDTechEx to be the largest RFID market by 2017 at nearly $6.5 billion worldwide[4]. This is expected to be largely propelled by government mandates requiring animal tracking for improved food safety. According to the U.S. Department of Agriculture, in the U.S. alone there are over 100 million cattle, and over 35 million additional cattle born each year[5]. In the instance of a food safety issue (like E. Coli in tainted meat), the affected products can be traced in some instances to the animal itself, as well as to any other animals or products that it may have come into contact with. This should allow quicker, more efficient and less costly recalls both in human health and money terms.

In farm management, RFID systems can be used along with software systems to allow for easier tracking of various animal characteristics depending upon the type of farm (e.g., milk production in a diary farm). This allows more tailored care and decreased labor costs. One report states that using RFID systems in such a way as to track individual cattle rather than groups of cattle has allowed one farmer to estimate saving $35-60 per head[6].

RFID tags are used in many toll roads to collect fees automatically as a vehicle drives by, while companies managing parking lots or managing auto fleets may use RFID to track vehicle locations or empty spots within their lots.

ExxonMobil has introduced its “SpeedPass” to collect payment at gas stations[7]. Credit card companies such as Visa, with its new "payWave" system, are beginning to offer RFID embedded smart cards to provide users with a more convenient "contactless" payment option[[8]]. Smart card shipments increased 16% to 675 million shipments in 2009[9]. One estimate from CHASE Card Services holds that smart cards may reduce transaction times by between 10-40%[10].

RFID can be used for security - data on the tag can attest to the authenticity of the attached document. Many nations have begun including them in passports -- the U.S. began doing this in 2006 -- and China recently completed a $6 billion project to include them in national ID cards[11]. RFID tags can likewise be placed in employee or visitor badges so organizations can use them to allow after hour deliveries or monitor visitor and staff access[12]. Some countries are considering adding tags to currency as a counterfeit measure[13].

For large retailers, RFID can significantly reduce costs despite the upfront investment in tags and systems, by reducing shoplifting and employee theft, and eliminating the need for manual inventory counting. This can also reduce overall inventory costs due to greater automation, increased data accuracy and decreased labor. It can also increase sales with better stocked shelves; according to the Wall Street Journal, an American Apparel pilot program saw a 14.3% increase in sales in RFID enabled stores due to better stocked shelves[14], and IHL group recently stated that eliminating the estimated $430 billion in sales lost due to out of stock items could help retailers improve sales by as much as 10%[15].

In addition to tracking inventory, tracking a business’s assets can also be very valuable. A Texas hospital reports saving $30,000 per month by tracking and monitoring the idleness of rented equipment[16].

Tracking assets can be an important application for businesses. According to Frost & Sullivan, hospitals lose 10-20% (approximately $750 million worth) of their assets each year. Construction companies can use RFID to make sure that tools are not left behind at work sites[17].

Businesses can also use RFID to better understand their customers. More accurate inventory data can allow a business to better anticipate future demand, and businesses have also used RFID to track promotions and sales[18]. Another application is monitoring the in-store travel of a garment from the rack to the dressing room and back to better understand consumer preferences[19].

RFID can be helpful in a business’s compliance or safety issues as well. Sushi restaurants can track raw food to make sure it doesn’t expire[20]; healthcare providers can track employee’s badges to make sure hands are washed[21] and they can track instruments to make sure they are sterilized[22]; and an Australian mining company can track vehicle traffic underground to avoid collisions[23].

Some of the more unique uses we’ve heard about are researchers tracking honeybees to study their behavior[24], casinos embedding tags in poker chips to monitor the money at their tables[25], and a waste management company using trucks with readers and RFID tagged recycle bins to measure the weight of a recycle bin prior to disposal and give the customer credit for their bottles and cans[26].

There are clearly many varied uses for RFID technology, and new ones are being dreamed up every day. It will be interesting to see what they come up with next.

[1]
Want, Roy “RFID: A Key to Automating Everything” Scientific American 8/9/2008

[2]
Overlook Seen Positive for RFID Market despite Downturn. Supply & Demand Chain http://www.sdcexec.com/web/online/IntegrationERP-Trends/Outlook-Seen-Positive-for-RFID-Market-Despite-Downturn/19$12198

[3]
O'Connor, Mary. "Pfizer Using RFID to Fight Fake Viagra." RFID Journal http://www.rfidjournal.com/article/articleview/2075/ 1/1/ 1/6/2006

[4]
Swedberg, Claire. "Food and Livestock Tagging Expected to See Bumper Gains." RFID Journal http://www.rfidjournal.com/article/view/3725/1 2 November 2007

[5]
Cattle. National Agricultural Statistics Service (NASS), Agricultural Statistics Board, U.S. Department of Agriculture http://usda.mannlib.cornell.edu/usda/current/Catt/Catt-07-23-2010.pdf 7/23/2010

[6]
Ishmael, Wes “The Power of One.” Beef Magazine http://beefmagazine.com/mag/beef_power_one/ 7/1/2010

[7]
"ExxonMobile SpeedPass" http://www.ti.com/rfid/shtml/apps-contactless- speedpass.shtml

[8]
"Visa's PayWave catching on in Canada." Contactless News. http://www.contactlessnews.com/ 2010/05/27/visas-paywave-catching-on-in-canada 3/27/2010

[9]
"Report: Smart card market to expand in 2010." Contactless News. http://www. contactlessnews.com/2010/05/12/report-smart-card-market-to-expand-in-2010 5/12/2010

[10]
The Self-Service ‘Buy-and-Pay’ Market” Vending and Foodservice Trends in the US Packaged Facts, June 2008.

[11]
Weier, Mary Hayes “Slow and Steady Progress” Information Week http://www.informationweek.com/news/mobility/RFID/221601551

[12]
“Kalorama Tech in Healthcare Bundle” Kalorama Information, A division of MarketResearch.com; November 2008

[13]
“What Every Internal Auditor Should Know About RFID”, Knowledgeleader, June 2006

[14]
Bustillo, Miguel “Wal-Mart Radio Tags to Track Clothing” The Wall Street Journal http://online.wsj.com/article/SB10001424052748704421304575383213061198090.html 7/23/10

[15]
Johnson, John “Retailers look to RFID item level tagging to kick $430B out-of-stock problem” RFID 24-7 6/6/11 http://www.rfid24-7.com/articles/060611.shtml

[16]
“Texas Health Presbyterian Hospital Dallas Uses Wireless System to Track Location of Supplies, Equipment” http://www.texashealth.org/body.cfm?id=1629&action=detail&ref=1137

[17]
Nazarov, Amy “The Internet of Things” InformationWeek 9/7/2009

[18]
Budde, Paul & Harper, Phil Australia 2007 - Mobile Data and Content,- The Long Wait for 4G;Paul Budde Communication 9/2007

[19]
Nazarov, Amy “The Internet of Things” InformationWeek 9/7/200

[20]
“When Sushi Meets Technology” http://www.todayonline.com/Business/SME/EDC110623-0000291/When-sushi-meets-technology, 1/23/2011

[[21]]
“Ecolab, Proventix become allies in RFID hand hygiene compliance monitoring”, RFID News http://www.rfidnews.org/2011/06/28/ecolab-proventix-become-allies-in-rfid-hand-hygiene-compliance-monitoring?issue=rfidnews_20110630, 6/28/2011

[22]
“Kalorama Tech in Heatlchare Bundle” Kalorama Information A division of MarketResearch.com; November 2008

[23]
Crozier, Ry “NSW mine tests RFID thesis” itnews http://www.itnews.com.au/News/264246,nsw-mine-tests-rfid-thesis.aspx, 7/21/2011

[24]
“Flight of the honey bee played to the tune of RFID” RFID News http://www.rfidnews.org/2011/05/31/flight-of-the-honey-bee-played-to-the-tune-of-rfid, 5/31/2011

[25]
Nazarov, Amy “The Internet of Things” InformationWeek 9/7/2009

[26]
Ibid.

Nanoparticles Improve Lithium Ion Batteries

2011-07-20T06:00:00.000-07:00

We wanted to expand on our press release this morning regarding the completion of our Phase I STTR project, because this is a very exciting development.

The materials used for lithium ion batteries are expensive. Other, cheaper materials are available, but they are not typically used because they suffer from "capacity fade" -- that is, when you repeatedly cycle (i.e., drain and re-charge) them, they don't last very long, especially in warmer environments.

Comparing battery cells with our nanoparticles (coated)
and cells without (uncoated). After just 30 cycles in
high temperatures, the uncoated cell capacities have
dropped significantly, while the coated cells still perform
close to where they started.

We worked with the University of Wisconsin to prove that adding certain nanoparticles in a certain way to these less expensive materials deters capacity fade.

This means the less expensive materials can be used -- and this can help tremendously with the cost issues that are preventing the use of lithium ion batteries in some major applications.

We've received a lot of interest in the technology -- from a Fortune 500 company to a small but well-funded start-up. All of these companies are working in the battery or battery materials area and each of them plan to watch carefully as we bring the technology to full commercialization. They could very well end up being the technology's first licensees.

We will soon be submitting a Phase II proposal to fund the commercialization effort. We should have an answer on that proposal toward the end of the year.

Why RFID? - Part 2 in our RFID Series

2011-07-18T19:50:00.000-07:00

Radio Frequency Identification (RFID) has the potential to dramatically alter the way people live their lives and the way businesses and governments operate. Its impact will be especially felt in business where some foresee no less than “a business revolution”[1]. RFID systems are comprised of three things, a tag with an antenna and microchip to store data, a reader to interrogate the tag and retrieve the data, and software to interpret and organize the data as desired. Much more than a “glorified bar-code”, RFID allows tracking and identification of objects in real time; some systems even allow constant tracking.

With an RFID system, we have the ability to take nearly any object and make it “smart” or at least “smarter” by allowing it to communicate back to its reader. A basic tag allows the object to communicate its location. Some tags are combined with sensors to provide more information. Think of a tag combined with a temperature or heart monitoring sensor on a patient in a hospital. Integrated into the hospital network this could allow patient location and condition monitoring in real time throughout the hospital[2].

Some of the general benefits of RFID systems are that they allow accurate and efficient data acquisition. With the increased computerization and automation provided by an RFID system there is a decrease in manual data entry and therefore fewer opportunities for errors. As RFID systems are wireless there is less need for “cumbersome cables”, they take a minimal installation time, and have low maintenance requirements[3].

For consumers RFID should yield increases in convenience, efficiency and safety. With RFID tagged retail products and checkout readers we should see more self-service retailers, perhaps even hybrid-vending machine / mini-marts with no employees other than the ones needed to tag all the mini-mart’s products[4]. RFID enabled “Smart Cards” should “reduce consumers’ average transaction time by between 10% and 40% depending on whether purchases are made in stores or at drive-throughs”[5]. On top of quicker and more convenient shopping, products should be safer as livestock, pharmaceuticals and everything else being tracked with RFID can report to consumers the product’s history, and “pedigree”, assuring the consumer of both the safety and quality of the product[6,7]. Farther into the future there are the ideas of automated kitchens; e.g., your milk carton notifies the refrigerator that it has expired, or that its contents are low; the refrigerator, in turn, notifies you, or simply orders a new carton from the store[8]. The possibilities for RFID to change our day to day lives are numerous, wondrous and limited only by our imaginations.

While the benefits of RFID for business may not be as glamorous as those for consumers, businesses will enjoy the greatest rewards from implementing these systems by being able to (to name a few):

Better locate and deploy inventory in the supply chain
Reduce lost shipments
Increase sales by decreasing out-of-stocks and increasing in-store item availability
Reduce employee theft
Protect brands through ensuring product integrity
Better understand consumer preferences
Increase knowledge available to the customer
More quickly and efficiently facilitate recalls
Track, monitor and manage promotions and sales
Locate, track, maintain and prevent theft of company assets
Reduce labor’s share of operational costs through increased automation
Increase predictability in product demand

In addition to these more generalized benefits for businesses there are many specific benefits for different particular applications or industries, too many to name here. It is clear however that because of these benefits RFID will become a major part of business operations. Businesses will eventually need to adopt RFID in order to run more efficiently and keep up with the competition.

[1] Budde, Paul & Harper, Phil Australia 2007 - Mobile Data and Conten,- The Long Wait for 4G; Paul Budde Communication 9/2007 http://www.budde.com.au/Research/2007-Australia-Mobile-Data-and-Content-The-long-wait-for-4G.html

[2] “Diagnostics Market Research Bundle” Kalorama2009 Diagnostic Industry Bundle; Kalorama Information A division of MarketResearch.com, May 2009 pg 116

[3] “Kalorama Tech in Heatlchare Bundle” Kalorama Information A division of MarketResearch.com; November 2008; pg 37

[4] “The Self-Service ‘Buy-and-Pay’ Market” Vending and Foodservice Trends in the US Packaged Facts, June 2008.

[5] “The Self-Service ‘Buy-and-Pay’ Market” Vending and Foodservice Trends in the US Packaged Facts, June 2008.

[6] Swedberg, Claire; “Norwegian Food Group Nortutra to Track Meat” RFID Journal; July 22, 2008 http://www.rfidjournal.com/article/view/4208

[7] “RFID and UHF: A Prescription for RFID Success in the Pharmaceutical Industry” http://www.scribd.com/doc/59002369/WP-RFID-UHF

[8] Budde, Paul & Harper, Phil Australia 2007 - Mobile Data and Conten,- The Long Wait for 4G; Paul Budde

Articles about our S/Cap RFID tag

2011-06-30T08:07:00.000-07:00

RFID Journal, the premier publication for the RFID industry, did an article on our new S/Cap RFID tag yesterday, June 29: http://www.rfidjournal.com/article/view/8565

In addition, the product had a nice write up on VeryFields, which hosts the largest RFID tag database, on June 28: http://blog.veryfields.net/?p=2334

US patent reform

2011-06-27T11:45:00.000-07:00

The following is an excerpt of a couple of postings from the old Enable IPC blog, dated during July and August of 2007:

The July/August (2007) edition of Forbes Small Business has an important and interesting article that discusses the overloaded US patent system. The backlog of applications is now at 800,000! … There are some reforms that are in the works, apparently. A bill is aimed at improving the quality of patent applications. However, the FSB article says that the bill would make things more difficult for small businesses.

In particular, the issues seem to be changing the protection from "first to invent" to "first to file", … -- meaning you could invent something first, but if someone else files a patent application before you, they get the rights.

The article seems to say that larger businesses are generally for this change while smaller companies are against it (the reason being, larger companies can more easily beat smaller companies to the patent office because they have greater resources).

The latest issue of Fortune Small Business contains a letter from Lynn Sky (owner of Blue Sky Gallery) that asks the question: if we change the law from first to invent to first to file, then "aren't we simply legalizing theft?"

Last week, the House of Representative passed a plan for patent reform, which includes the change to “first to file” (see http://dld.bz/aeD23 ). A number of groups continue to oppose this particular provision, including the National Small Business Association (NSBA; see http://dld.bz/aeD3k). The NSBA also brings up the fact that patent fees are being diverted from the patent office, which is contributing to the backlog issue as well.

The House version, however, has some differences with a Senate version that was passed earlier and the two versions now have to be reconciled.

It will be interesting to see what we end up with. We agree with the NSBA; "first to file" seems wrong and the diversion of US patent fees needs to stop. The USPTO needs those fees so they can hire and utilize additional, more experienced examiners to permanently address this backlog.

The website law.com has provided an interesting summary of where we are at today. Check it out at: http://bit.ly/kAI0GO

Enable IPC Introduces the S/Cap RFID Tag

2011-06-21T06:55:00.000-07:00

This morning, we were excited to announce the launch of a new product: the S/Cap RFID Tag.

RFID stands for Radio Frequency Identification. Whether they realize it or not, most people encounter RFID everyday; when they use the EZPass tollway, when the use their "SpeedPass" device at Mobil stations, when they have the chip placed in their pets in case they get lost . . . there are many examples of RFID in use right now and many more are sure to follow.

(Check out our blog posting on RFID basics to learn more)

Our tag is geared toward asset tracking. Companies might use it to keep track of expensive equipment. Protecting assets means more than just ensuring no one walks away with a piece of equipment. An oft-cited 2007 report published by McAfee and Datamonitor estimates that an average laptop, which might cost $1,000, holds data worth $972,000, and could store as much as $8.8 million in commercially sensitive information and intellectual property.

Also, the internal costs – in time, productivity and cash – of physically trying to track a misplaced asset or locating and purchasing a needed replacement due to loss or theft can be enormous.

What makes our tag truly unique, however, is its power source. Most tags do not use a power source, and those that do typically will use a small battery that will last maybe a year or two. We don't use a battery; we combined an ultracapacitor with a small light panel instead.

The result is a read range of up to 75 feet (other tags in this class will read anywhere from 3 to 40 feet or so). In addition, because ultracapacitors can outlast batteries by as much as 1000x, our tag could last longer than many of the assets it tracks.

So, while most tags we compete with offer 90 day to 1 year limited warranties, we offer a 7 year limited warranty.

We are excited about this new product. We think it will enhance and expand the use of RFID, especially in outdoor and harsh environments.

The press release on our new product can be found here: http://dld.bz/aedzC

More information on the tag, including a link to download or view a data sheet, can be found at http://rfid.enableipc.com

IP Rights: ideas vs expression

2011-06-16T09:10:00.000-07:00

LegalZoom.com recently created a blog post that discussed the issue of ideas vs the expression of those ideas, and what can be protected under US law. Essentially, it comes down to reducing the idea to writing as a first step -- just because someone had an idea before anyone else doesn't mean they automatically have the rights to a patent or copyright to it.

The article can be found here: http://dld.bz/ad8tv

In the coming weeks, we plan to post a series of articles on intellectual property, patents, trademarks, copyrights and licensing from our perspective. Enable IPC stands for "Intellectual Property Commercialization" (i.e., turning technologies into products). We think we will have quite a bit of interesting information to share on the subject.

Some Basics About RFID Technology - Part 1 in our Series

2011-06-14T06:15:00.000-07:00

According to the RFID journal, the idea of Radio Frequency Identification (RFID) has been around since World War II. When approaching a friendly radar position German pilots would roll their planes, which would change the signal reflection and alert the radar operators that a friendly craft was approaching; this is something like a passive RFID system. The British meanwhile, fixed transmitters to their craft to send signals to special receivers at their radar stations alerting the operators that a friendly craft was approaching (more like an active RFID system).[1]

RFID systems consist of two parts: a reader (like the radar station in the examples) and a tag (like the airplanes, or the airplane’s transmitters). An RFID tag can be as simple as a microchip and an antenna. The tag transmits information to the reader via radio waves and the reader intercepts and interprets the information.

RFID tags can further be defined as passive, battery assisted passive (BAP), or active. BAP and active tags use a power source to enhance the signal so it can be read from much further away.

Passive RFID tags are comprised of two components: a chip and a radio antenna. The reader is used to send out a signal that 'wakes up' the chip in the tag. The tag sends back the signal ('backscatters') to the reader, transmitting the information on the chip. Passive chips backscatter 10-15% of the energy they receive and, therefore, can usually be read from only a few feet away.

Battery-assisted passive (BAP) RFID tags contain an embedded power source – a thin film battery or other energy storage device. When receiving a signal from a reader, the power source enables the tag to backscatter much more of the energy it receives (some claim as much as 90%). BAP Tags have been shown to be read from dozens of feet to over 100 feet away.

Active RFID tags utilize a power source (usually a stronger battery than BAP tags), are typically 'always on', and emit the energy from the battery rather than through backscatter. This means essentially that they are always broadcasting a signal and therefore do not reflect back the signal from a reader. They are needed in electromagnetically unfriendly environments and some can be read from readers over 100 feet away; and, with additional power, some can be read from over 300 feet away.

There have been three major issues with the energy storage components of BAP and active RFID tags: cost, reliability and maintenance. Up until recently, active and BAP technologies added significant bulk and therefore cost to RFID tags. With recent thin film battery technologies bulk is less of an issue, however the thin film batteries can be less reliable and more costly. In addition, detection ranges can drop significantly with the age of the tag and battery, with some dropping from dozens of feet to a range comparable to a passive tag.

There are a wide variety of uses for RFID however, and they make use of all the different RFID characteristics. We will discuss more on RFID applications in later postings, but small, inexpensive and simple Passive RFID tags can be printed out in large quantities and used to help track large volume, but relatively low cost items such as garments for Wal-Mart. Their low-read range is not a problem when used for things like contactless payment cards, or automobile toll station passes. BAP or Active tags, while more expensive, provide options for tracking large items in large fields like containers in a dockyard, automobiles in a parking lot, or pallets in a warehouse.

At some city libraries you can now use a self-checkout where you place your stack of library books on an RFID pad (the reader), scan your library card, and within seconds the books are identified and checked out on your account. One day soon, we expect to use a “smart shopping cart” where you put the items you want in a cart, they are logged and payment is done automatically when you exit the store. Companies should see the ability to easily and cost-effectively track assets or track inventory throughout their supply chains, and food and pharmaceutical supply chains should be able to more effectively control the quality of their products making them safer for consumers.

RFID has the potential to impact all of our lives. Using the unique characteristics of different types of tags and systems RFID should see a wide variety of uses and is sure to have tremendous implications for our future.

[1] Roberti, Mark “The History of RFID Technology” RFID Journal http://www.rfidjournal.com/article/view/1338

Out-of-stock items: an issue addressed by RFID

2011-06-13T08:17:00.000-07:00

Inventory control can be a tedious exercise for employees, and it can result in frequent errors. But, the lack of a good inventory control system means the seller may not have a good handle on what he needs to stock and how many of the item he needs to keep on hand.

And, one of the worst things for a retailer is to have a customer leave empty handed because the seller was out-of-stock on a desired item.

One study says that 20% of shoppers of electronics equipment end up leaving the store without buying anything because the item they want is out-of-stock. This translates into a $430 billion annual loss for retailers.

The study also states that resolving this issue would increase overall sales by 10%.

Wal Mart, Kohl's, Dillard's and others are aggressively addressing this problem using RFID. Placing a tag on each item, rather than conducting manual inventory tracking, will help eliminate or greatly reduce the losses from out-of-stock goods.

A summary of the study can be found here: http://dld.bz/acMyk

RFID to track sponges in operating rooms

2011-06-12T11:27:00.000-07:00

RFID News reports that a VA medical center in Cleveland is working with an RFID company to track sponges used in operating rooms, making sure that none are left inside patients. The article can be found here: http://dld.bz/adb54

The 311th birthday of Ewald van Kleist

2011-06-11T15:11:00.000-07:00

311 years ago yesterday, Ewald Georg van Kliest was born. He invented the Leyden Jar (i.e., the first capacitor).

Of course, capacitors have come a long way since then. Today's ultracapacitors (also known as "supercapacitors" or "electric double layer" [EDL] capacitors) can have 1,000,000+ times the capacitance of traditional capacitors.

Also, ultracapacitors can have 10 to 100 times the power and 1000 times the cycle life of batteries. They tend to fall short, however, when one compares the energy density of ultracapacitors to batteries.

If you have a minute, check out our video titled "What is an ultracapacitor?" on our YouTube channel (it only lasts 60 seconds). Here's a link: http://www.youtube.com/enableipc

If you want to know more about ultracapacitors and Enable IPC's technology, check out our website's write up: http://www.enableipc.com/ultracapacitors.htm

And, we have some papers and presentations available for more in-depth information: http://www.enableipc.com/papers_ultracapacitors.htm

The White House: Supporting the Responsible Realization of Nanotechnology's Full Potential

2011-06-10T07:50:00.000-07:00

The White House is interested in the supporting the "realization of nanotechnology's full potential". The Office of Science and Technology announced the release of a report that concludes that, not only has the National Nanotechnology Initiative's $12 billion investment in nanotech over the past 10 years been extraordinarily successful, but that it should be continued to ensure "continued U.S. dominance" in the area.

The following are some of the areas affected by nanotechnology that are discussed or mentioned in the report:

- water purification

- nano-medicines

- adaptive camouflage

- self-healing armor

- self-decontaminating clothing

- sensors for a myriad of applications

- nanostructured materials for transportation that are stronger and lighter, and therefore energy-saving

- catalyst breakthroughs, leading to huge improvements in clean, sustainable and plentiful energy

and many other examples.

Among other things, the report also states that, in the next 10 years, it expects "nanotechnology-enabled diagnosis, imaging, and therapy [that] will provide superior new methodologies for the management of cancer"; initiatives to address "Nanotechnology Applications for Solar Energy, Sustainable Nanomanufacturing, and Nanoelectronics for 2020 and Beyond"; and "a stronger focus on fundamental issues related to environmental health and safety."

The announcement can be found on the White House's Office of Science and Technology website here: http://dld.bz/acMvp

The report (96 pages long and 5+MB) can be downloaded here: http://1.usa.gov/k5UmpL

New research from NIST: Catching and releasing nanoparticles helps determine if they are safe

2011-06-09T08:32:00.000-07:00

Nanoparticle safety has become a major worry in recent years. In 2007, there was evidence discovered that some nanoparticles could damage DNA and lead to cancer. This led to a call for studies on the safety of different types of nanoparticles.

Yesterday, an article we found online at Science Daily's website (here's a link: http://dld.bz/acJmM) discussed some work along these lines by researchers at NIST. They figured out a way to capture nanoparticles, where they could be exposed to cells to see whether they are pose a hazard, then released.

The Dow at 20,000 by the 2012 election?

2011-06-03T16:02:00.000-07:00

MSN posted an article yesterday that explains the reasoning behind one hedge fund manager and investor's prediction that the Dow Jones Industrial Average will hit 20,000 by the end of 2012.

James Altucher cites the Fed's purchase of long-term Treasury bonds, the extension of the Bush tax cuts, a "multiplier effect" from the stimulus and the fact that corporations, some experiencing record profits, have begun (or will soon begin) spending.

He has his detractors, of course . . . but we hope he's right! Here's a link to the article: http://dld.bz/aceve

Another use for RFID: tracking the flights of honey bees!

2011-06-02T15:34:00.000-07:00

A group of honey bees were tracked by researchers using RFID tags. According to an article in RFID News, "each bee was equipped with a RFID tag - a Microsensys mic3-TAG 64-D - on the thorax carrying a unique 64-bit number, allowing the researchers to individually track the experimental bee’s flight behavior."

The researchers recorded the bees coming and going over a period of days. The full article at rfidnews.org can be found here: http://dld.bz/abZgE . There is also a link in the article to the technical paper describing the research. In addition, a close-up picture of one of the tags on a bee can be found on page 2 of the pdf file here: http://bit.ly/jaI48i

"Engines of Creation" - published 25 years ago this month

2011-06-01T15:32:00.000-07:00

25 years ago this month, "Engines of Creation" was published. This classic book by K Eric Drexler introduced nanotechnology into the public discussion.

Entrepreneur Magazine has the trademark to "entrepreneur"

2011-05-12T13:42:00.000-07:00

You may have heard that Entrepreneur Media (which publishes Entrepreneur Magazine) trademarked the word "entrepreneur" over 30 years ago.  It seems that the media company has been suing some small businesses that use the term.

We are in the process of trademarking a term for our RFID tags and were intrigued by this story. We are not attorneys and this is not leagl advice, but the primary purpose of trademark laws (so we are told) is to prevent confusion among the public.  Trademarks are granted for certain goods so a consumer knows what he or she is getting when shopping.

For example, the term Big Mac® is a registered trademark for McDonald's. If Burger King sold a hamburger called a "Big Mac" it would be in violation of McDonald's trademark. However, JC Penney's also owns a trademark to the term Big Mac®, referring to a line of men's clothing. A consumer would not be confused by this. When a person orders a Big Mac® at McDonald's, he or she is not expecting to purchase a pair of overalls.

In addition, one cannot trademark the word "hamburger" when referring to a hamburger, nor "overalls" when referring to overalls.   These would be considered generic or descriptive terms.

From Entrepreneur Media's perspective, their attorneys claim they are objecting to the use of the term in areas where there could be confusion and (rightfully and lawfully) leaving other uses alone. For example, one can call his/herself an "entrepreneur" as much as he or she likes. However, a company which called itself EntrepreneurPR and put out printed publications for small businesses was "crushed" by Entrepreneur Media in the courts. From their track record, it would appear that Entrepreneur Media has the law on its side.

Bloomberg's article, however, suggests that the actions by Entrepreneur Media are strange because the magazine is going after the very people who (you would think) they would want to attract as customers. But, Entrepreneur Media sees things differently. The article can be found here: http://bloom.bg/iSzLNM

(Thanks to Kat Shoa for providing this article!)

Corporations back in a VC mode

2011-05-12T13:23:00.000-07:00

A couple years ago, corporations were spending less on R&D and investing less in startups. This trend has seemingly made a 180 degree turn.

"Last year, corporations invested $1.9 billion in venture capital in America, up 33 percent from $1.35 billion in 2009," according to an article by Robert Ackerman. You can find the article here: http://bit.ly/kPUNsk

This is an indication of improving economic conditions in the corporate world. We keep hearing that companies are experiencing record earnings, but generally hoarding the cash; it sounds like some of those earnings are now beginning to go into creating or maintaining strategic advantages through investing.

Technology marches on . . . the last manual typewriter company closes down

2011-04-28T13:20:00.000-07:00

I suppose it had to happen sooner or later. The last (apparently) manual typewriter plant has closed its doors (here's a link to an article about it: http://dld.bz/YfVU).

The good news is you can still buy electric typewriters!

OTC Markets Announces Trading Statistics

2011-04-14T12:42:00.000-07:00

The OTC Markets Group recently announced trading statistics for each of its tiers in 2010. The numbers can be found here: http://bit.ly/gWiUce

We compared these statistics with those announced a year ago, covering 2009, which we found here: http://bit.ly/kBhBQT. The OTC Markets Group tiers and the results of our comparisons are as follows:

OTCQX - the highest tier for companies that go through a rigorous review and meet certain financial standards. This group more than doubled from 78 to 159 companies between 2009 and 2010

OTCQB - for companies that are "reporting" to the SEC or a banking regulator and are current in their reporting requirements. This group (with the 2009 numbers combined between the OTCBB on Pink Quote and the OTCBB only) saw a 14% increase, rising from 3,390 to 3,851 reporting companies during the year.

OTC Pink Current Information - for companies that follow certain standards and make certain information available through the OTC Market's news and disclosure service. This group rose 8% from 1,695 to 1,830 companies.

OTC Pink Limited Information - for companies that may or may not be troubled, but have not been current in reporting through the OTC Market's news and disclosure service. This group remained at about the same number: 739 in 2009 and 749 in 2010.

OTC Pink No Information - which includes "defunct companies that have ceased operations as well as 'dark' companies with questionable management and market disclosure practices." This group rose by a whopping 38%, from 2,445 in 2009 to 3,375 in 2010.

The reasons for the activity can be varied -- they could be newly listed companies making their stock available for trading for the first time or they could be companies that once traded on higher exchanges that have been downgraded.

US government investment in nanotechnology research in 2012: $2.1B

2011-04-07T12:16:00.000-07:00

The US government investment in research in nanotechnology, among all the different agencies (e.g., the Department of Energy, the National Science Foundation, Health & Human Services, NIST, etc.) will total $2.1 billion in 2012, according to the National Nanotechnology Initiative (NNI).

That's close to a 15% increase over spending in 2011. It demonstrates the commitment of the US government to remain in the forefront of nanotechnology research. Read more here: http://www.nano.gov/

Drinking clean water from sewage: a nanomesh straw

2011-04-05T11:53:00.000-07:00

There's a company called Seldon Technologies that is using nanotechnology in ways that certainly help the human condition. Imagine being able to extract clean water from sewage, or a scummy pond or other bacteria-laden source.

Think about the implications of that for places like Rwanda and Haiti, where clean water is scarce.

Forbes recently ran an article (here's a link: http://bit.ly/hNMeB4) on Seldon detailing one of its products: a nanomesh filter that could solve a multitude of humanitarian issues, as well as some market potential for things like air, fuel and other filtration.

Another example of nanotechnology making our lives better.

Nano cladding on nuclear rods -- would it have helped in Japan?

2011-03-31T11:52:00.000-07:00

Last July, the US Department of Energy made a $900,000 award to a researcher to investigate nano cladding on nuclear rods.

IEEE Spectrum recently issued an article, suggesting that, if the nano cladding had been in place in Japan, perhaps it "might have helped avoid leakage when the rods were temporarily exposed." You can read the article here: http://bit.ly/h83WWF

Nanotechnology is going to continue to change our lives in ways we can't imagine right now, and it this could be yet another example.

Why is the number of US public companies declining?

2011-03-28T11:19:00.000-07:00

According to an article in CFO magazine (you can find it here: http://bit.ly/hFfZcD), there are fewer public companies in the US because "the markets have become inhospitable to smaller private companies looking to raise less than $50 million." This is due to many factors, such as Sarbanes-Oxley and new order handling rules.

The Small Company Capital Formation Act of 2011, sponsored by Rep. David Schweikert (R-AZ), is designed raise the cap on Regulation A capital raises from $5 million to $50 million. This would be a step in the right direction, as it would offset some of the costs of being public.

However, it's not a cure-all. We need a completely new public market model that makes the reporting requirements and costs less onerous on the smaller companies. We have some ideas along these lines, and we'd like to hear your ideas as well.

(Thanks to Mike Miller of CFO 911 Solutions for forwarding the article)