NEVADA INVENTORS ASSOCIATION

"Education, Assistance, and

Networking for the Inventor"

The Nevada INVENTOR

Official newsletter of and by the Nevada Inventor's Association

Volume: XIV No. 4 -Education, Assistance, and Networking for the Inventor- Aug. 2003

Next Meeting: August 23, 2003 9:00 AM Washoe Medical Center Room cr101

Our web site is 'www.nevadainventors.org' Founded in 1988

We are a 501(c)6 group under IRS rules.

The purpose of NIA is to educate inventors and potential inventors through whatever means available, including regular meeting, classes, seminars, workshops, and evaluations, within NIA or in cooperation with other persons or organizations. The education of inventors, or potential inventors, may also include the publishing of written materials, such as a regularly published newsletter, flyers, notices, or letters.

Additional goals of NIA are to inform its members of private, civic, governmental, and public resources which may be of assistance to inventors; to promote a positive public image of inventors; to provide for its members a referral/resource directory; and to furnish assistance to its members, whenever possible, by directing their efforts toward the successful development of their inventions.

Licensing Your Invention
Adapted from From Patent to Profit And we continue from last month
by Bob DeMatteis Thursday, November 07, 2002

What rights do licenses grant?
Licenses usually grant proprietary property rights to the licensee. This is usually some form of intellectual property and can be the rights you have based on the granting of a patent, trademark or copyright. It can also be proprietary property based on trade secrets, customer lists and of course, patents that are granted or pending.

It is not necessary to have a patent granted to execute a license agreement. In fact, it is usually wise to license your invention during the patent pending phase and not wait until after it is granted.

Why are Licenses needed?
Frankly, licenses are not always needed, as may be the case between good friends or family members. In other situations, licenses are multi-page documents negotiated by attorneys. This might be the case with the sharing of major technology, such as reactor processing technology to make plastic resins or the "cold draft" process from Sapporo, which Miller's uses to make Miller's Genuine Draft.

Licenses do not have to be long, legal documents. Instead, they can be simple 2-3 page documents. What is most important is that they clearly cover the subject matter, to avoid misunderstandings between you and your licensee.

Most misunderstandings involve the reporting of royalties. In addition, if a company changes management or is sold, you want to make sure that the payments and product qualities continue. The best way to do this is with a straightforward license agreement.

Four types of licenses and two approaches to licensing
Choose the type of license that directly reflects your manufacturing and marketing strategy. the decision of whether to grant them exclusively or non-exclusively is your second consideration. Generally speaking, there are four types of licenses:

Licenses to manufacture, sell and use. This is the most common type, and is used with a manufacturing entity, regardless of whether it will use its own sales organization to sell your invention. With this arrangement, the licensed entity usually pays you royalties based upon the number of licensed products it sells.

A sales-only license. This is used when licensing to a sales organization. In concert with this license, you must also issue "manufacturing only" licenses (or a simple manufacturing authorization) to those appointed producers to make product for your sales organization. Either the sales company or the manufacturer can be designated to pay the royalties in this type of licensing arrangement.

A manufacturing-only license. This is usually a simple authorization to manufacture for a designated "sales-only" licensee or for your own sales organization. It can also be a sublicense to augment the production of another licensed manufacturer. Technically speaking, a manufacturing-only license allows the manufacturer to also sell the product, but the sales are restricted to those generated by the authorized sales licensee.

A license to use. This is common in computer software sales. When you purchase software, you enter into a license agreement upon installation of the software into your computer. This license agreement states that the software is for your use only and not to be copied for the use of others.

A license may combine two approaches, such as a license to manufacture and use, but this is uncommon.

Exclusive Licenses
Exclusive licenses are probably the most common licenses granted. They are generally for niche markets (we know that most new products begin as niches). An exclusive license granted to an entity protects the entity's interests and investment. If you are granting an exclusive license, it must also have built-in protection for you, since you will be relying solely upon a single licensee for your income.

Licenses can also be granted within the scope of a certain industry, field, or region. for instance, you may have patents that cover products that apply to non-competing industries, such as a food product sold to hospitals, fast food chains and supermarkets. These three unrelated fields would most likely have three different marketing approaches.

In addition to the standard licensing clauses, exclusive licenses should include:

Guaranteed sales

Guaranteed royalties Immediate recourse if sales and royalties are not met

Most new invention efforts are realized through the use of exclusive licenses. The fact that they are exclusive means that there is a dedicated team effort, which is at the heart of bringing about the success of a new invention.

Non-Exclusive Licenses
If you are licensing several users, you will use a non-exclusive license.

Non-exclusive licenses are typically used for commodity-type products, such as an aluminum cans' flip top. Take care to license non-exclusive licensees at an "arms-length." Manufacturers tend to be very possessive of their sales and customer base and would frown upon your showing favoritism to a particular licensee. Non-exclusive licenses will usually contain:

No sales minimums

No guaranteed royalties, just a set rate

Recourse in the event of non-payment, infringement, etc.

Once you have a clear picture of your manufacturing and marketing strategies, and how you will take your invention to market, your license agreements will reflect it. It will be carefully tailored to protect both your sales and marketing partners and your interests. Your license agreement will dovetail perfectly with your manufacturing and marketing strategy.

GOOD NEWS AND BAD

Our coffers (ICGA) received a boost this month, but it was because our sister organization, the INVENTORS NETWORK OF GREATER AKRON dissolved for lack of interest during the past year. We are one of two groups in Northeast Ohio to inherit from the Akron group's treasury. John Sovis presented our president Bil Bazik a check for $222.08 as a part of the dissolution of the Akron group's treasury. Our former president, the late Bob Abernethy, was very helpful in getting the Akron group started. We are sorry to have seen the group expire.

PTO NEWS

The IAO (Inventors Assistance Office} has replaced the office of Independent Inventor Programs. The IAO answers anyone's questions. However, there are experts that assist Independent inventors in each Technology Center when the

questions/problems call for greater

assistance that can be offered by the IAO.

What About Provisional Patent Applications

0.1 What is a PPA?

A provisional application for patent (PPA) is a new patent application mechanism designed to provide a lower cost first patent filing in the United States. It is intended to give US inventor / applicants more parity with foreign applicants under the GATT Agreements.

0.2 What's the difference between provisional and non-provisional patent applications?

Regular (non-provisional) Application: The non-provisional application establishes the filing date AND initiates the examination process. Provisional Application: The PPA only establishes the filing date and automatically becomes abandoned after one year. The filing cost for a provisional is much lower than the regular application, so it saves initial investment when you are not yet ready to enter the regular application process. Filing of a PPA also allows you to use the term "Patent Pending" during the year that the provisional remains in force.

0.3 What are the advantages of a PPA over a regular application?

The PPA gives you the ability to claim 'Patent Pending' on your invention as soon as the completed application and enclosures are filed, for only a $75.00 filing fee. In the event you need to quickly obtain a patent filing date, the PPA is a tool that can short cut the time and cost of obtaining your Patent Pending. If during the year following the filing of a PPA you determine that the invention is commercially viable, and that it justifies the higher cost of formal patent protection, you can later file the more expensive regular application. The filing of a PPA can allow the immediate promotion of the product or invention for sale with greater protection against having the invention stolen. The PPA therefore can be used as a strategic business tool to defer the higher regular application costs to a later date - up to one year later.

0.4 Are there disadvantages to filing a PPA?

Although there are benefits to filing a PPA, it's important to understand the disadvantages of a Provisional application. They include (among others): Provisional applications for patent may not be filed for design inventions, The PPA filing date (priority date) cannot be claimed if the one year deadline for filing a non-provisional application for patent is missed, You will loose the PPA priority date if the claimed subject matter in the later filed non-provisional application must have support in the provisional application for patent, Amendments are not permitted in provisional applications for patent after filing as they are in a regular application, Failure to file a regular application within one year of filing the PPA will result in the PPA being abandoned, and you will lose your invention priority date for later patent application.

0.5 Can the PPA automatically become a Regular patent?

No. In fact, the PPA only lasts one year, after which time it becomes abandoned. If you want to pursue a regular patent on your invention, you will have to file the regular patent application before the one year provisional term expires.

0.6 Are the applications for Provisional and Regular patents the same?

The PPA does not require you to include claims. Further, the Patent Office does not review the provisional applications, so the provisional cannot become a regular patent application. The regular patent application requires that you include all of your claims for the present invention. See Patent FAQs for more information on Regular Patent Applications. Regular patent applications are reviewed for merit by the Patent Office.

0.7 Do I need to first file a Provisional, then later file the regular patent application?

You do need to file the regular application within a year of filing the provisional, assuming that you want to pursue formal patent protection on your invention. However, it is not necessary to file a PPA before filing a regular application. you can skip the PPA and go directly to the more expensive Regular Patent Application.

0.8 What do I need to submit to the Patent Office for a PPA?

A PPA will be deemed to have been properly submitted, and a filing date will be provided to the inventors once the PTO receives: a written description of the invention, complying with all requirements of 35 U.S.C. §112 ¶ 1; any drawings necessary to understand the invention, complying with 35 U.S.C. §113; and the names of all inventors. the filing fee of $75.00 a cover sheet identifying: application as a provisional application for patent; inventor name(s); inventor residence(s); title of the invention; name and registration number of attorney or agent and docket number (if applicable); correspondence address; and any U.S. Government agency that has a property interest in the application.

0.9 When should I file my PPA?

The PPA must be filed within one year following the date of first sale, offer for sale, public use, or publication of the invention. But you should be aware that although you are permitted to file a PPA in the US within one year of public disclosure, you may not be granted such invention priority in foreign countries, and may not be able to obtain later patent protection in those countries. A PPA should also be filed before the occurrence of an event that you feel requires presentation of your product or invention with a 'Patent Pending' status

0.10 Can I file my own PPA?

Yes. The Patent Office has the necessary forms and instructions to make it fairly easy for an inventor to file their own provisional application.

0.11 Should I use an attorney to file a PPA?

It is highly recommended that you use the services of a registered patent attorney or patent agent to file your PPA.

0.12 If it's so easy to file a PPA, why should I invest in a patent attorney or agent?

Although the mechanics of filing a PPA are straight forward, the disclosure of the invention in the provisional application for patent needs to be as complete as possible. If during the one year period of the PPA you find that additional subject matter needs to be added in the Regular patent application, you will lose the original filing date (priority date) of the PPA. A patent professional skilled in developing descriptive language may be able to write the PPA description in a manner that would allow it to support a slightly different description in the later filed Regular application without losing the priority date.

0.13 I have an IDEA; what should I do next?

Before an inventor begins spending money on the patent process, even at the relatively low cost of a PPA, they must first verify the marketability or feasibility of the invention. Way too often inventors go down the road of inventing 'just knowing their invention will sell' - but not having the desire to see whether it won't sell.

So the recommended steps to proceeding with the invention process are:

(1) begin an inventor's journal and record in writing everything having to do with the invention,

(2) complete some good market research and verify the marketability, and

(3) begin the patent process.

For a good step-by-step reference, see the Inventor's Starting Point. "../inventors_cafe/startingpoint.html"

Give Your Invention a Litmus Test by Vernon Brabham

Carefully assess your new idea with these four points in mind

So you think you have an idea for a great new invention that's going to make you lots of money? Remember the person who invented anklet wristwatches for contortionists? How about the fellow who came up with the idea of piping snow and ice balls from Antarctica to irrigate the Australian desert? Have you read about the inventor who got a patent for checkered paint or the one who patented duster slippers for cats to keep floors cleaner? You've never heard of them? You're not alone and aren't you glad you didn't invest in any of these ideas? If you don't want your idea to wind up in the "D.O.A." pile, be sure it has a chance to be profitable. There's no shortage of ideas in the U.S. Quite the contrary, in fact. Approximately 125,000 patents are issued every year in this country, at a cost of around $500 million.

Let's make a conservative assumption that for every idea patented there are four more in some state of serious preparation. If that's true then every year there are more than half a million ideas for new products or services. Some experts estimate that only 1 in 1,000 patents becomes a profitable product. The way to put a stop to such a waste of time, effort, money and hope, as I see it, is to assess carefully your new idea with these points in mind:

1) Is it needed and, more importantly, is it wanted?

2) Can it be sold for at least 5 times what it will cost to make?

3) Is it already being made and marketed as well as yours could be?

4) Will it meet all legal, safety and environmental concerns?

You can do some home-made research into these concerns by asking the people who are already selling your type item. You can talk with potential consumers to get some idea of their perception of your new product. Would John Doe pay roughly $12 (or whatever figure you estimate) for a small hand-held item that would comb his moustache, brush his teeth and eliminate wrinkles? The only way to find out if he would is to ask him.

By the way, put very little stock in what Aunt Harriet or the man next door says. The real test will come when it's their purchase money on the line. If your idea still looks pretty good after this preliminary scrutiny, then find an independent party to evaluate your product (sometimes called an IPD for independent product developer). One is the Wisconsin Innovation Service Center at the University of Wisconsin. They will send you an honest evaluation of your product idea and will also conduct a preliminary patent search. All of this they will do for $495. Another of these groups you may want to look into is the Washington Innovation Assessment Center. They are connected to the Washington Small Business Development Center at Washington State University. They have a pool of several hundred evaluators and will pick three to evaluate your idea and let you know what they think of its profit potential. These people charge $350 and for an additional fee will conduct a patent or trademark search. I have personally used the Wal-Mart Innovation Network (WIN). They are affiliated with Southwest Missouri State University in Springfield. They will score your product on a 41 point scale and they do a fine job. Their charge is $175, and for my product they were accurate, credible, thorough and fast. They take an in-depth look that evaluates your concept including market potential, projected return on investment, safety concerns and environmental impact. WIN also rates your product's appearance, price, durability and functionality in comparison to competitive products and also provides suggestions on marketing, promotion and distribution. In addition, if your product scores high enough, they send it to a group of experienced Wal-Mart buyers. This doesn't mean they will buy it, but I consider it a sort of back-door introduction that can't hurt a bit. There are other groups out there doing the same sort of thing. You can find them on the internet or through Inventors' Digest. The ones mentioned above, however, are above reproach and give value beyond what you pay. All of them, by the way, will sign a non-disclosure agreement so your idea is secure with them. This means you can have them evaluate your idea even before you start the patent process. Then, if it looks feasible, you can go ahead with that costly procedure. If not, you have saved a bundle.

Now that you have had your product evaluated and have the report in your hand, what next? If you get a bad, or even marginal, report, take heed! If experts, who have no vested interest in your product, tell you it probably won't be profitable, accept their advice and save your cash. Take that money and energy and go on to the next idea which may turn out to be a "keeper." After all, Babe Ruth struck out 1330 times, didn't he?

Dr. Vernon Brabham is a New Product Consultant, inventor, writer and entrepreneur. For a FREE report, "101 Tips On How To Think Up New Product Ideas, Get Them To Market and Get Richer!" and other info on the above process go to www.bizine.com/inventInventors' Digest Magazine

1. Stay away from invention marketing firms that advertise on radio and late night TV. They're out to fatten their wallets and empty yours!

2. Keep good records about your idea some day they may be the back up you need to prove YOUR idea is YOURS!

3. Go to a Patent Depository Library and do your own patent search. If you find your invention is already patented, there's no need to go to a patent attorney.

4. Build a model. No need to get fancy at first--cardboard, white glue, balsa wood, off-the-shelf parts. No matter how simple the idea, prove it works.

5. Have your invention evaluated by a non-biased professional (even if your Mom's in the business, go to someone else!).

6. Read all you can about new product development. Go to your local book store or library...others have gone before you. Don't re-invent the wheel.

7. Network with other inventors. Join a local inventors' organization.

8. If your patent search looked promising (see #3), make an appointment with a patent attorney. Show your attorney the results of your search and follow the advice he or she gives you.

9. Do what you do well and hire pros to do the rest.

10. Don't fall in love with your invention but if you're really sure you've got a winner (see #5), hang in there! Even "overnight" successes take a while! Inventors' Digest Magazine

OFFICERS of the NIA

President Dr. Bill Torch Our web site www.nevadainventors.org

Vice- Pres John Martison www.uspto.gov

Sec-Treasure V. Chemist www.inventorsdigest.com

Sergeant at Arms Floyd Krebs www.patents.ibm.com

Programs Carol Foldvary-Anderson www.inventorfraud.com

Nia founder Don Costar Don's site www.doncostar.com

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