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. 3 -Education, Assistance, and Networking for the Inventor- July 2003

Next Meeting: JULY 26, 2003 9:00 AM Washoe Medical Center Room cr101

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

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 appeals to many inventors because it solves many of the problems associated with making money from inventions. Licensing can be a welcome alternative to spending hundreds of thousands of dollars and thousands of hours gearing up to go into business. Licensing an invention can be relatively easy, once an inventor has built his/her team of experts. This is particularly true if the manufacturing and marketing experts are two different companies. With a marketing expert wanting the exclusive sales rights and with a willing manufacturer eager to produce, licensing your proprietary rights is a relatively straightforward matter.

Inventors considering the licensing of their inventions should learn all they can before entering into an agreement. If this is your choice, take the time to learn the many nuances of licensing.

What is a license?
A license is nothing more than an agreement, a contract. Just as a patent conveys rights to an inventor, so does a license agreement convey rights to a licensee. Simply stated, a licensor (you the grantor of the rights) gives a licensee (the receiver of the rights) the right to manufacture, and/or sell, and/or use your invention. Either party may be an individual, company, corporation or other legal entity.

A license is literally a written authorization for a licensee to make, use or sell products under the scope of your inventions or trademarks. It also sets up the terms and conditions with which the licensee must abide to keep the license in force.

The key terms and conditions of a license typically include:

1 Payment of royalties

2 Maintaining manufacturing and sales records

3 Marking of patent number(s) on products

4 Maintaining insurance

5 Provisions in the event of the company's sale

6 Provisions in the event of bankruptcy

7 A time frame

It can also include:

1 Acceptable quality standards

2 Minimum sales volumes

3 Minimum royalties

4 A right to subcontract

5 The use of a certain trademark

In a license agreement, you should carefully position the provisions that apply to your needs. They must be carefully written to avoid ambiguity, so they are clearly understood by both parties.

by Bob DeMatteis, November 07, 2002 patentcafe at www.cafezine.com

Three Awful Truths About Earning Money With Your Million Dollar Idea
by Harvey Reese Wednesday, October 30, 2002


I've been creating consumer produc for companies for more years than I like to admit, and have long ago lost count of the number I've licensed. It's certainly more than a 100. I'm living proof that you don't have to be a genius to prosper in this business, but you do have to do certain things in certain ways.

First, I understand the satisfaction that creative people such as you derive from the inventing process. It's problem solving, with all of the attendant pleasures ones gets from creating a solution. However, this is first and foremost a business, and unless your solution will resonate with a sufficient number of people, and unless it offers substantial and exclusive advantages to the potential licensee, it'll never see the light of day. Inventing is often the easy part - the real creativity is in determining what needs to be invented.

The most effective way to identify that perfect problem is by having intimate knowledge about an industry before trying to invent products for it. There is no substitute. To creating a product intended to compete in an industry that you know little about is like a customer tailor making a suit and then looking for someone it fits. Unless you first have a genuine and full understanding of the specific industry, you'll be inventing products that have long ago been invented, you'll be solving problems that have long ago been solved, and you'll be creating products that either have little value or have long ago been created.

Second, it's important for you to understand that your customer is the licensee - not the consumer. Worry about pleasing the licensee; let him worry about pleasing the consumer. It's not enough that your product might offer advantages to the consumer, it's more important that it offer advantages to the manufacturer. It can't be a product that will simply switch sales from one of his products to another, and it can't be a product that's so insignificant that its more trouble than its worth in terms of tooling, inventories and marketing costs.

Manufacturers will readily introduce one dumb product after another if dreamed up internally by the boss or his paid employees, but when it comes to licensing, the bar is raised much higher. You must understand that a product's marketability and its licenseability is not the same thing. The truth is, companies hate paying out royalty money to outsiders. They'll only do it, kicking and screaming, if the idea is exclusive, truly unique, truly exciting, and holds out the hope for big sales and profits.

And finally, nothing will happen with your idea unless you seat yourself in front of the person who can say "yes," or get someone like me to do it for you. There are no shortcuts. Sending out letters to people you don't know is pointless, and making a website for your product is self-defeating. The unsolicited letters are thrown in the trash, and all the website does is give you something to brag about to your friends and to salve your conscience for not making the personal calls.

The whole intent of presenting a product idea is to create the impression that it's an exciting and secret new product. By blabbing it out on the Internet, hoping to interest a manufacturer, all you're doing is demonstrating that it's yesterday's news that has already been turned down by everyone else in the business. Forget the letters and forget the website.

If you won't make the calls, or if you can't get someone like me to make them for you - nothing will come of your idea, no matter how wonderful it might be.

Avoid engineers, art directors and all other middle management types. These people are gate keepers with the authority to say "no," but without the authority to say "yes." These people are your enemy; they'll waste your time, build your hopes and, in the end, they'll break your heart. I talk about how to get appointments with the decision makers in my books and articles. Perhaps in another article I can review it here.

Know the industry before inventing, understand that your customer is the licensee, not the consumer, and get yourself in the face of the person who can say "yes." Do these three simple steps and I can almost guarantee that it's only a matter of time before royalty checks start appearing in your mailbox.

From uiausa.org June 2003

Because peak registration dates are quickly approaching, I was wondering if it would be possible for you to place a blurb and a link to TGIF on your website, as well as get the word out to those of your members who might be interested in our event. Thanks for all your help and I look forward to hearing from you in the future.
Xixing Jing
Marketing Assistant

Raymond A. Nuzzo is a registered patent attorney. You may contact him at 65 Osmond Street, P.O. Box 120588, East Haven, CT 06512-0588, Tel: 203-467-7895, Fax: 203-467-7233, E-mail rayannuzzo@aol.com

This article explores some of the ways an inventor can jeopardize valuable patent rights as a result of the inventor's own acts or failure to act. In many instances, the inventor may initially decide that patent protection is not necessary. Subsequently, the inventor may realize that the invention is commercially valuable and that patent protection is warranted. The inventor now realizes that as a result of his or her past actions or failure to take certain actions, the inventor cannot obtain a valid U.S. or foreign patent. In some instances, the inventor may receive a patent, but the patent is held invalid by a court during litigation when an opposing party produces evidence relating to the inventor's previous acts or inaction that invalidate the patent.

Loss of U.S. Patent Rights

The Invention Was Described In A Printed Publication

Under Title 35 of the United States Code, Section 102 (hereinafter referred to as "35 USC § 102"), a person shall be entitled to a patent unless the invention was patented or described in a printed publication in this country (the United States, its territories and possessions) more than one year prior to the date of application for patent in the United States. This is one of the most common rejections issued by the United States Patent and Trademark Office ("USPTO") during examination of patent applications. Although this type of rejection can be based upon printed publications authored by persons other than the inventor, many inventors lose patent rights as a result of their own articles, press releases, etc. that describe the invention and which are published more than one year prior to the date on which a patent application is filed in the USPTO. The following example illustrates how this statutory section can preclude an inventor from receiving a valid patent on the invention.

Example A Inventor Jones writes an article describing his invention and submits that article to a technical journal which publishes the article on January 7, 1996. Jones files a patent application on the invention on January 10, 1997. Jones cannot obtain a valid patent because the patent application was filed in the USPTO in excess of one year after the publication of the article. Jones should have filed a patent application in the USPTO by January 7, 1997 in order to preserve his rights.

The Invention Was On Sale

USC §102 further states that a person shall be entitled to a patent unless the invention was on sale in this country more than one year prior to the date a patent application is filed in the USPTO. Thus, if the inventor sells a product or prototype embodying the invention or places such product or prototype on sale in the United States more than one year prior to filing a patent application for that invention in the USPTO, the inventor cannot receive a valid patent. The effects of this statutory provision can be illustrated by the following example

Example B Inventor Smith reduces his invention to practice, i.e. constructs a working prototype, on January 1, 1995. Smith offers to sell the invention to a consumer products manufacturing company on February 1, 1995. The offer to sell the invention occurred in the United States. Smith files a patent application on the invention in the USPTO on March 1, 1996. Since the offer to sell the invention occurred in this country more than one year prior to the filing date of the patent application in the USPTO, Smith is barred from obtaining a valid patent on the invention.

However, a sale of the invention is considered experimental and not a bar to obtaining a patent under 35 USC §102 if the sale is primarily for the purposes of perfecting or refining the invention or determining whether the invention functions as intended.

Loss Of Foreign Patent Rights

Most foreign countries require that a patent application be filed prior to any public disclosure of the invention. This requirement is referred to as "absolute novelty". Most foreign countries define a "public disclosure" as a publication, oral presentation, public display or public use. It would not be possible to obtain a valid patent in an "absolute novelty" country if the invention is publicly disclosed prior to filing a patent application in that particular country. Absolute novelty countries include Canada, France, Germany, Japan and the United Kingdom.

The United States and most countries, including those mentioned above, are signatories to the Paris Convention. These countries are referred to as "convention countries". The provisions of this treaty provide that when a first patent application is filed in the patent office of a "convention" country, a corresponding patent application (for the same invention) filed in another "convention" country within one year of the filing date of the first application will be accorded the filing date of the first application. The date of the first application is referred to as the "priority date". Therefore, the effective filing date of the second application is the filing date of the first application. If the second application is not filed within the one year period, the second application's filing date will be its actual filing date. The following examples illustrate the connection between "absolute novelty" and the Paris Convention.

Example C Inventor Smith files a first patent application in the USPTO on January 2, 1996 and a second corresponding application is in Canada on September 7, 1996. The Canadian application is entitled to the filing date of the U.S. application. If Smith publicly discloses the invention after the filing date of the U.S. application, the public disclosure would not vitiate the "absolute novelty" requirement of Canadian patent law because (1) the Canadian patent application was filed within one year of the filing date of the U.S. application and is entitled to the U.S. filing date, and (2) the public disclosure was made after the U.S. filing date.

Example D Inventor Jones publicly discloses the invention at a trade show on February 1, 1996. Jones files a U.S. patent application on March 1, 1996 and a Canadian patent application on June 1, 1996. The effective filing date of the Canadian application is the U.S. filing date. However, public disclosure of the invention was prior to the effective date of the Canadian application and therefore destroys the absolute novelty required for obtaining a valid Canadian patent. Jones cannot obtain a valid Canadian patent. However, the public disclosure in this instance will not preclude Jones from obtaining a valid U.S. patent. If the public disclosure included a publication such as a written description or a press release, then Jones must file the U.S. application within the one year anniversary of the trade show, i.e. February 1, 1997, or else Jones will be barred from receiving a valid patent under 35 USC § 102.

Example E Inventor Smith files a U.S. patent application on his invention on March 1, 1996. He publicly discloses the invention via a press release on June 1, 1996 and then files a corresponding German patent application on April 1, 1997. The German application is filed in excess of one year after the U.S. filing date and is therefore not entitled to the same filing date as the U.S. application. The effective filing date of the German application is its actual filing date in the German patent office. Furthermore, the public disclosure of the invention prior to the effective filing date of the German application destroys the absolute novelty required under German patent law. Smith will not be able to obtain a valid German patent on the invention.

Activities that constitute placing the invention "on sale" under U.S. law do not necessarily constitute a "public disclosure" that could prevent obtaining a patent in an absolute novelty country. An offer to sell the invention made in the course of an on-going confidential relationship does not constitute a public disclosure and would not destroy the absolute novelty required in most foreign countries. However, the offer to sell the invention, regardless of whether it was made in the course of a confidential relationship, will trigger the start of the one year period under 35 USC §102 in which to file a patent application in the USPTO.

Conclusion

The following guidelines are offered to preserve U.S. and foreign patent rights:

a) when patent protection is desired, a patent application must be diligently prepared and filed first in the USPTO;

b) inventors should not publicly disclose the invention prior to filing a patent application with the USPTO. This will prevent loss of rights in the "absolute novelty" countries. Disclosures may be made after the U.S. patent application is on file in the USPTO;

c) if there are plans to offer the invention for sale prior to filing a U.S. patent application, make sure that such offer is made a part of an on-going confidential relationship. This will prevent any disclosure of the invention from being considered a public disclosure that would destroy the absolute novelty required in most foreign countries. The safest course of action is to file the U.S patent application first and then make any offers for sale;

d) docket or record the one year anniversary of the date the first sale of any products embodying the invention. The U.S. patent application must be filed

in the USPTO by this date; and

e) if foreign patent protection is desired in one or more convention countries, patent applications must be filed in these countries within one year of the U.S. filing date.

This publication is intended for informational purposes only, and is not intended to constitute professional advice as to any particular situation.

(c) 1999 Raymond A. Nuzzo

I think I have been ripped off. What do I do now?

By Bob Lougher

I think I have been ripped off. What do I do now? Through the years, this is the number one question that I have received from independent inventors. The "What do I do now?" is a relatively simple procedure for most. The "I think I have been ripped off" is the most difficult for the inventor to determine and then put into meaningful words.

Let's discuss the easiest part first. What do you do if you feel that you have been the victim of a fraudulent invention promotion scam? Simply file a complaint with the Attorney Generals Office in your State and the State the company is reportedly located in. Do not hire an attorney. That is almost the same as throwing good money after bad money. Most attorneys will not take on a case of this nature because it is an unfamiliar field and normally does not involve the recovery of enough money. If you win, you will only get a percentage of the refund.

The Attorney General's Office is your tax money at work. Utilize one of the services you pay for? If you lose, you don't lose anymore money. The AG's Office also poses a more practical threat than an average attorney does. The Attorney General's Office can ultimately file criminal charges against companies with too many unresolved complaints. These complaints constitute fresh witnesses to possible fraud. For this very reason, invention promoters normally act very swiftly in coming to a settlement with inventors filing complaints. An important note to remember is the promoter will seldom offer a full refund at first. If the complaint is legitimate stick to your guns until you reach a settlement agreeable to you. That is the ultimate solution, file a complaint with the Attorney General's Office. If you have already composed your complaint, file it also with the US Patent & Trademark Office.

Now to address the more difficult issue. I think I have been ripped off. Many inventors feel that if they were not successful with their product, they were a victim of a scam. Unless the salesperson guaranteed you success, this would not normally constitute a scam. You will not find anything in writing from the company that may constitute fraud. These schemes have been around long enough for the principals to learn not to leave a paper trail. You can bet that every piece of paperwork is rubber stamped by one of their legal experts.

Most every complaint lodged refers to what the promoter's salespeople said. Most generally it is something that contradicts what they have stated in writing. Salespeople have been known to exalt the merits of an invention when expressly forbidden to do so. Companies with dismal or non-existent track records present themselves as experts in getting new products to market. Many promoters use the same patent attorneys and patent searchers. It is important to find out what percentage of the company's patent searches come back positive. If nearly every search is positive, this may constitute fraud.

Why do salespeople lie? If you, the inventor, are presented the real statistics of a company and those statistics are dismal, how can that salesperson get you to pay them thousands of dollars in up-front fees? They are almost forced to distort or misrepresent the truth. Especially, when that person's paycheck is contingent on how much you ultimately pay the company.

Be specific in your complaint. Do not use hearsay. Don't lie. Always be completely truthful. If you are

telling the truth, don't be afraid of frivolous threats. If you have difficulty explaining yourself, then find someone skilled in letter writing to help you. You can always contact your local inventor support group for guidance. You should always notify the company that you are about to, or already have , filed a complaint with the Attorney General's Office. This is not legal advice.

I am not an attorney. This is based on real life experiences and it works.

OFFICERS

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 ww.inventorfraud.com

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

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