Commercializing Our Nanoparticle Solution for Li-Ion Batteries

The most popular rechargeable batteries in the world today are lithium ion.  In 2007, the independent market research company Frost & Sullivan predicted revenues from these batteries would amount to $10.4 billion worldwide by 2012.  A new report released in 2013 from the same company stated that the actual number was even higher: $11.7 billion.  In addition, this report predicts that sales of lithium ion batteries will double by 2016.[i]

The primary cathode material used in lithium ion batteries is lithium cobalt oxide (LiCoO₂ – to make this easier, we’ll call these “cobalt”), which is popular because of its high energy density (i.e., the amount of energy stored) by both weight and volume.  However, this material has some safety concerns, and is expensive. 

Other cathode materials are available, most notably lithium manganese oxide (LiMn₂O₄ – again, to make it easy, let’s call this “manganese”).  Although cell voltages and energy performance is slightly less than the cobalt cathodes, the manganese version has a similarly low recharge time and favorably compares to cobalt in terms of specific energy and cost.




Comparing LiCoO2 with LiMn2O4 cathodes
without our nanoparticle coating; adding
our coating improves cycle life.

In fact, in terms of material costs, reports have stated that the cobalt based cathode material costs an average of about $30 to $35/kg, while the manganese version was significantly less, at anywhere between $2 to $15/kg, depending on what study one believes.[ii]  And, major thermal stability studies have shown that the manganese cathode is much less prone to thermal runaway issues suffered by the cobalt cathode, which makes cobalt cathodes less safe.[iii]  

So, manganese cathodes are a much safer and less expensive alternative to cobalt.

The main reason manganese cathodes are not more widely used has to do with more pronounced “capacity fade” (especially at higher temperatures) than cobalt.  This is a decrease in the energy content of the battery, especially after repeated charging and discharging (capacity fade is seen by the consumer when a battery can no longer power a laptop on an entire cross country flight or when a cell phone battery drains more quickly than it used to).

Were it not for capacity fade, the manganese cathode might well be the chemistry of choice for lithium ion cells.  Consider what others have stated about manganese (LiMn₂O₄):

·         In a white paper, General Electronics Battery Co., Ltd., stated: “The chemistry of lithium manganese oxide LiMn₂O₄ is not a good option . . . because of its poor cycle life, especially at elevated temperature.”[iv] 

·         S.C. Park, et al, stated: “In order to use LiMn₂O₄ [i.e., what we called “manganese”] as a cathode material of lithium-secondary battery for an electric vehicle (EV), its rate capability should be improved.”[v]

·         And, Schwartz summed up the main reason LiMn₂O₄ is not widely used as a cathode, despite greater safety and lower cost: “LiMn₂O₄ that has been investigated extensively over the years has been plagued by severe capacity fade, particularly at elevated temperatures.”[vi]

Our subsidiary, SolRayo, has found a solution to the capacity fade issue.  Using nanoparticles, deposited onto manganese cathodes in specific ways, we have seen a significant improvement in cycle life.  

Scanning electron microscope (SEM) images of LiMn2O4 material
without and without our nanoparticle coating.  For perspective,
consider that the actual width of the material in each picture
is about 13/1000th the width of an average human hair. 



The above tests were conducted at elevated
temperatures (55C / 131F).  With our nanoparticle coating,
the "manganese"
batteries last longer.

We submitted a proposal to the National Science Foundation (NSF), under their STTR program, to commercialize this process.  The program has two phases (called, appropriately enough, Phase I and Phase II).  We completed a proof of concept under Phase I and, out of over 1000 initial proposals -- all of which were subject to extensive peer reviews by experts in both industry and academia -- SolRayo's was one of only 3% chosen by the NSF to be awarded a Phase II grant.   

Now, the pathway to continued, full commercialization of this concept is not as straight-forward as one might think.  Some chemistries and some nanoparticles don't always behave the same way when stepped-up into larger packages.  So, during meetings with cathode manufacturers, as well as some consultation with experts from a local national lab and our partners at the University of Wisconsin, we concluded that the best path to full commercialization will include stepping up our process to prove its performance and reliability in increasingly larger cells.

We have started by using coin-sized cells: CR2032-sized packages (i.e., about the diameter of a nickel and the thickness of, say, 20 or 30 sheets of paper).  The research involves varying the concentrations of the nanoparticles, cathodes materials, method of coating, firing processes, cathode preparation processes – initially in half cells, then in full cells – and many, many other steps to determine the steps that give us the best and most reliable performance, as well as the most economical process.  The process needs to be repeated until desirable results are consistent over a couple hundred cells.  Only when this is achieved can we say that the "nanoparticle recipe" – for that particular size and chemistry composition – is well-established.
  

One of our coin cells, next to a nickel for size comparison.



Our Phase II work has gained the attention of potential commercial partners and may open up certain markets to us sooner rather than later.  The results to date have culminated in meetings with Global 75 companies, and some anticipate new patent filings.  The Phase II effort is scheduled to be completed in March 2014.  

The next step is to prepare larger cells (not to say that there isn't a market for coin-sized cells utilizing our nanoparticle solution); in our case, 1Ah cells which would be assembled in pouches.  Following this, the process would be stepped-up further to 3Ah cells, and eventually 20Ah cells.  Once this is done, we would consider the process fully commercialized, and we would better understand the specific fields of use in which the process would apply.

This is not as easy as it sounds and requires a level of expertise that isn't easily found.  In our case, it requires certain commercial, academic and/or gov't-funded laboratory partners with experience in this area and a depth of knowledge that is really rather unique.

And, yes, these resources are available to us.

We may find that our nanoparticle process might work out well for smaller consumer applications or for larger industrial uses.  The process may end up as renewable energy storage for residential or utility scale applications, or it might end up being used in the battery bank of an electric or hybrid vehicle.

Or, it may apply to all these, in one way or another. 

---

[i] Frost & Sullivan, World Secondary Lithium-Ion Battery Markets, 2007, p 2-7 and “Despite Recent Issues, Global Lithium-Ion Battery Market To Double”, RenewGrid, 22 Feb 2013, retrieved from http://www.renewgridmag.com/e107_plugins/content/content.php?content.9612#.Uef6vfPn-Uk

[ii] J. Amirault, et. al. The Electric Vehicle Landscape: Opportunities and Challenges,2009, p 12;  Dr. Wolfgang Bernhart, Power Train 2020: The Li-Ion Battery Value Chain – Trends and Implications, Roland Berger Strategy Consultants, Aug 2011 (presentation), slide 11; and Comparison of Different Battery Technologies, Trade Korea, 26 May 2006, retrieved from http://www.tradekorea.com/product/file/download.mvc?prodId=P00233231&fileSysNm=/upload_file2/product/231/P00233231/cbe9caa6_bc17a819_5d6e_4664_b546_3e4384d1c8a6.pdf

[iii] J. Dahn, et. al., Thermal Stability of LixCoO2, LixNiO2 and LiMnO2 and Consequences for the Safety of Li-ion Cells. Solid State Ionics, Vol 69, 1994, p. 265

[iv] Comparison of Different Battery Technologies, General Electronics Battery Co., white paper, 2006, p.4, retrieved from http://www.tradevv.com/chinasuppliers/angelgeb/pdf/LiFePO4-battery-75ee.pdf

[v] S.C. Park, et. al., Improvement of the rate capability of LiMn2O4 by surface coating with LiCoO2, Journal of Power Sources, 103:86, 2001

[vi] Mel Schwartz, Smart Materials, CRC Press, 2009, p. 8-5

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

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

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

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

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

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.

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

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

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

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.

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

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

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.

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

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

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

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.

 

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

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

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 . . .

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

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

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

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

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

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

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/