Small Business Owners Need to Get It in Writing

ContractWhy do so many business owners only think about the contract AFTER they have done the work?

Let me set up the typical scenario:

Prospective Client:  Hi Attorney Proia.  My accountant, Joe Schmo, suggested that I contact you.

Me:  Hi!  How can I help you?

Prospective Client:  A customer called me up and needed a custom website with X, Y, and Z functionality.  The website came out great, and other customers are interested in it.  Who owns the website?

Me:  What does your contract say?

Prospective Client:  I don’t have a contract.  They needed the work done in a hurry…there was no time to lose…it was a handshake deal…

Ugh!

Why, oh, why didn’t you think about this stuff BEFORE you did the work?

Written contracts are important.  They define relationships.  They sort out the pesky little details like what happens if you don’t perform, who owns what, and how on earth you’re going to get paid.

When I worked in-house, legal was always blamed for holding up the deal.  If it weren’t for legal, we could have booked that order by now.  (I always liked to think that if it weren’t for legal, the company would be out of business because we’d never get paid, everyone would steal our IP, and general chaos would reign, but I digress.)

I know that negotiating contracts can be frustrating and time-consuming.  Contracts can actually be scary for small business owners.  What if I ask for too much?  Will the customer walk away?

When you think that the worst thing that can happen is the customer walking away, it feels better to just take the money without making waves.  Can’t you hear the list of excuses for not getting an agreement in writing?  They seem like nice people.  They’ll never sue me.  I know they’re good for the money.

But then you end up with uncertainty, and let me tell you, uncertainty is WAY scarier than letting the customer walk away.  In fact, after a few rounds of trying to get your money, you will wish you had let them walk right out the door.

By trying to avoid a little pain in the beginning, you could be dealing with a lot of misery in the end.

Don’t let this happen to you.  Get it in writing BEFORE the $#!+ hits the fan (because you can always use the contract to clean up after the mess.)

7 Things American Companies Need to Know About the America Invents Act

patent-reformIt’s amazing how fast 18 months flies by.  It seems like just yesterday I was lamenting the passing of the America Invents Act, and now here we are mere days away from its final implementation.

If you haven’t heard, the United States will officially follow the herd and become a First-Inventor-to-File nation on Saturday, March 16.  In light of this new beginning, here are 5 things you should know about the AIA to ensure that your inventions are protected.

1.  First-Inventor-to-File Wins

Here’s the scenario.

Two competing companies are working to solve the same problem.  Both companies invent the same solution.  Each company files a patent application with the US Patent Office.  Who does the Patent Office award the patent to?

Under the First-to-Invent system, the patent would be awarded to the inventors who could show that they invented the invention first.

Under the First-to-File system, the patent would be awarded to the inventor who filed their application first.

To quote Tom Hanks’ character in Cast Away, “We live and die by the clock.”  You don’t have time to make everything perfect before you file a patent application.  Good enough will have to do.  (You might even have to settle for just OK.)

2.  You Will Spend More Money Earlier in the Process

Under the First-to-Invent rules, an inventor could tinker around with his invention, tweaking it until he turned his concept into a finished product.  At that point, he could file one patent application to cover the end result without fear that someone would step in and file their application before he was ready.

Those days are gone.

You no longer have the luxury of waiting.  An inventor will have to be on top of his patent game from the very beginning.  The new corporate patent process might look something like this: file at conception, file again, maybe multiple times, as the inventor works the concept into something that resembles a more complete product, and at the end when the final product finally reveals itself.

That’s a lot of money earlier in the process to ensure that you have won the race to the patent office.

3.  You Need a New Attitude

In order to make this adjustment successfully, your organization MUST adjust your thinking when it comes to patents.  You can’t file a patent as an afterthought in your New Product Development process.   You need a procedure to identify any and all patent issues as early in the process as possible.  If you don’t, you run the risk of losing your valuable business assets.

4.  The Strategic Use of Provisional Patent Applications

Make sure you and your patent attorney understand how to use provisional patent applications.  When money is tight and time is of the essence, these informal, non-examined patent applications may just be the answer.

5.  Amending Claims Can Change the Rules

It all seemed so simple.

Applications filed before March 16, 2013 will continue to be subject to the old First-to-Invent rules.  Applications filed on or after March 16, 2013 will be governed under the new First-to-File rules.

But nothing is ever as simple as it seems under the AIA.

What if you amend or add claims in your first-to-invent patent application after the March 16, 2013 date?

Even though you had filed your patent application prior to March 16, 2013, certain changes you make to the claims may pull your application into the First-to-File rules, and you may not get the full protection of the First-to-Invent rules you thought you had.

6.  Change to the Grace Period Rules

Like the First-to-Invent system itself, America had another somewhat unique feature in its patent system.  The United States offers what is known as a Grace Period.

In the United States, inventors were given 12 months to file a patent application after the date the invention was first disclosed to the public no matter who disclosed the invention.  That was a benefit of the first-to-invent system.

Now, the grace period only applies to disclosures made by the inventor.  Public disclosure by anyone else anywhere in the world prior to you having a patent application on file means you lose your patent rights.

(Think about how this could impact heavily competitive industries with multiple companies working to solve the same problems.)

7.  Prepare for the Unexpected

Just when you think you understand the AIA things are bound to change.  Like any new law, what the various provisions and terms of the AIA really mean will be decided by the Courts.  Over the next decade (or longer) IP practitioners will closely watch as cases wind their way through the Federal court system.  There is already talk that a Constitutional challenge will be waged against the America Invents Act itself.

Don’t be fooled.  The America Invents Act brings significant change to American business.  In 10 days, we enter into a brave new world, America.  Good luck and God speed.

3 Little Words

It’s January, the month of resolutions, of planning, of strategizing what we hope to accomplish in the new year ahead.

Personally, I don’t make resolutions.  Although there are a few things I could change about me, I know that making resolutions is a waste of time.  Why?  Because I know I’m probably not going to stop procrastinating, there will still be clutter around my house, and even though I pay for membership to our local YMCA, I’m still going to struggle to get my butt over there.  (That’s just who I am.)

I typically make goals instead.

Every year I make a list of things that I hope to accomplish in the 12 months that lay ahead of me.    Some goals are personal, like find a new kitchen table that better accommodates our family or paint the master bedroom.  I might even unpack the last of the boxes from our move 3.5 years ago.  (This particular item has to do with that procrastination thing I mentioned above.)

I also spend a fair amount of time setting goals for my business.   So, during the last week of 2012, I took out a notebook and started jotting down all of the things I hope to accomplish in 2013, like

  • Conduct a webinar once a month.
  • Write an eBook on IP for Entrepreneurs.
  • Blog every Tuesday and Thursday.
  • Build my “List”.

There were goals related to social media and income, as well as a new blog that I’ll be rolling out this month.  When I finished this year’s list, I felt pretty good about it.  With a little effort, each item is pretty easy to accomplish, and if I accomplished every item on the list, I would certainly move by business forward.

Or so I thought.

I was proud of myself and my list.  That is until I read David Ackert’s blog post, Three Words for 2013.  David doesn’t make resolutions.  Instead, David uses Chris Brogan’s “My 3 Words” concept for New Year’s planning.

The 3 words idea is simple.  You identify 3 words that serve as themes for the upcoming year.  These words are supposed to “sum up what you want to work actionably on changing/improving in the coming year.”  According to Chris Brogan, choosing 3 words to focus on helps you look at the bigger story.

“The big story is that which we want to believe about our life and our goals and our plan…Goals are a way of knowing that you’re headed in the direction of your…story.”

So I took another look at my list.

My list was just a list of individual action items.  It’s not a bad list, but merely a laundry list, a to-do list.  It didn’t say anything about what I want to be true and to believe about my life.  Where was my “big story”?

So I came up with my 3 words.

  1. Dare. 

  2. Communicate. 

  3. Earn. 

If I dare to step out of my comfort zone and communicate my message to those who need to hear it, I will earn respect, an audience, and money.

That’s a pretty powerful story.

I challenge you to try this exercise.  Let me know what your 3 words are in the comments below.

Step Into the Arena and Be Prepared to Get Dirty

 

VS

 

 

 

Intellectual property is a full-contact sport.

Yes, you read that right.

I mean full-contact, complete with trash talking, gloves come off, smack-down contact.

Punches are thrown.  Combatants get bloodied and bruised.  There are winners and losers.

Don’t believe me?  Just check out the ruckus surrounding Samsung and Apple in their battle for smart phone supremacy.

Unfortunately, there are those in the media who don’t understand this simple concept.

An ill-informed media pretend that they understand the intricacies of patent law after an interview or 2 with a disgruntled company and a few hours of research.  They twist words, spew fiction as fact, and completely misrepresent the law.  Then these reporters refer to patent lawsuits as “WAR” as if U.S. lawmakers never intended for companies to sue over patent rights.

They would have you believe that IP is like golf.  That it’s a gentleman’s game where nobody gets hurt.  No one sues anybody.  Everyone gets a license with great terms if they want one, and companies that choose litigation over licensing aren’t playing by the rules.  They point to an increase in the number of patent contests as a sign that the system is broken.

But anyone who knows a thing or two about patent litigation knows that’s not true, and never has been true.

Patents first and foremost are offensive weapons.

Patents aren’t magic amulets that protect your product or your business from infringers.

They are the means by which companies assert their rights to their government-granted monopoly.  And guess what?  Lawsuits are, and have always been, the intended method of asserting those rights.

In fact, patent lawsuits have been around for a very long time.

So why is there so much criticism now?

What has changed (and brought a massive amount of exposure to patent litigation) is the number of prominent participants, especially Apple, as well as the huge amounts of money at stake.

A few high-profile technology giants decided to up the ante in patent litigation.  For the first time in decades, some of the biggest patent owners in the US turned to their patent portfolios to protect their market share.  And Apple’s involvement in serious patent litigation brought massive amounts of attention to something that no one in the mainstream media ever cared about before.

For years, most people, including journalists, never thought twice about patent litigation.  Suddenly, Steve Jobs says that Apple will go thermonuclear on Google, and people demand to know what’s going on.  A big verdict and a few billion dollar+ patent auctions later and the world as they understand it has been turned upside down.

However, the world of patent litigation, as most people understand it today, never existed.

IP has always been about how you use it to protect your market share.  It’s meant to stop anyone who would intrude on your property.  It’s is not passive or defensive.

So it’s time to stop pointing to the “Smart Phone Wars” as an example of what’s wrong with the system.

THERE’S NOTHING WRONG WITH THE PATENT SYSTEM.

In fact, this is exactly how the system was designed to operate.  You just didn’t know that.

I’m sorry if you don’t like it.  I’m sorry if this type of aggressive action somehow offends you.

Apple, Microsoft, Samsung, Google…they all know what they are doing.  It’s the risk they decided to take when they put their products out into the marketplace fully aware that there could be patents out there that could impact their business.

So to everyone who wants to be in business today…

  1. Ignore your intellectual property at your own peril.  If you’re the second inventor or you file your patent application late, you are probably out of luck.  That great thing you “invented”.  You may not own the rights to it.  Not everyone is guaranteed a trophy in this contest.
  2. Ignore another company’s intellectual property at your peril.  You aren’t guaranteed a license.  In fact, assume you won’t get one.
  3. If the only thing you’re willing to do is get a patent, you are wasting your money.   I know I said it before, but it needs to be repeated, patents aren’t magic amulets that protect you from patent infringement.   It’s a business tool that can help you achieve great success, but only if you use it!
  4. If you aren’t prepared to step into the arena, walk up to your opponent, and throw that patent around, what are you going to do with it?  And please don’t say frame it and hang it on the wall in the lobby.

If you want your intellectual property to work for you, you have to be prepared to fight for your rights.

Be Prepared (It Applies to Your Intellectual Property Too!)

“By failing to prepare, you are preparing to fail.”
― Benjamin Franklin

Disaster preparedness seems to be on everyone’s mind this week.

With the effects of Hurricane Sandy lingering up and down the East Coast, the news media has been speaking out about the importance of being prepared when a disaster strikes.  I know that my family, along with millions of others, spent much of last weekend putting away lawn furniture, checking flashlights, and shopping for batteries, water, and non-perishable food.

Employees and business owners alike have spent countless hours trying to ensure that their companies can still operate in the wake of flooding and power outages.

One such story in particular struck me.  It’s the story of a data center, Peer 1, based in NYC.  The power went out, the flood waters came, and they’re keeping their servers running with the help of a generator.  A generator located on the roof of the building.

To keep that generator going, the employees (and their customers!) are carrying 5 gallon buckets of diesel fuel up 17 flights of stairs.

If that generator goes down, it will impact hundreds of customers, as thousands of websites will go down with it.  (As a lawyer, I hope they have a really good Force Majeure clause in their customer agreements.)

That’s a lot of pressure, but it seems like they were prepared.  They had the generator in place and made sure they had fuel on hand.  They even found help when they needed it.

Peer 1 had one more thing on their side, warning.  Hurricanes don’t show up unexpectedly, so they had time to plan and mitigate any damage.

But often times catastrophe strikes without warning.  If that happened, would you be able to make a “bucket brigade”, or its equivalent, to save your business?  Would your customers come to your rescue?

All of this got me thinking about intellectual property.

Companies are faced with intellectual property disasters every day.  Disasters they never anticipated and are ill prepared to handle.

What is an IP disaster you might ask?  Well, here are a few examples:

-  You receive a cease & desist letter (or worse, you get sued outright for patent infringement.)

-  You discover that a competitor is about to launch a product that looks an awful lot like yours.

-  You find counterfeit goods are being sold in the marketplace.

-  You stumble upon your artwork or photos on Pinterest, someone’s website, or printed onto t-shirts without your permission.

Any and all of these events happen to unsuspecting businesses everyday in the United States, and most small or medium-sized companies are not prepared for them, especially when it comes to patent litigation.

One patent lawsuit could wipe out your business more completely than any hurricane.

The number of IP related lawsuits in general, and patent suits in particular, are increasing.  Companies are doing everything they can to ensure they protect their market share. If that means, suing somebody for patent infringement, then so be it.  Are you prepared to weather a patent litigation or protracted licensing negotiations?

Very few companies ever think they will sue someone, and they falsely believe they will never be sued, because they are small.

The idea that patents are the weapons for big business only is a myth.

Patent litigation doesn’t just happen to the likes of Apple, Google, or Microsoft, and if you aren’t prepared, one litigation could put you out of business.

I also anticipate that the number of IP disasters will rise sharply with the implementation of the First-Inventor-to-File Rules in March, 2013.

If you aren’t ready to file early and file smart before March 16, 2013, then you could lose valuable patent rights.

Many companies will not fully understand all of the implications of this change and how it impacts their business.  Unfortunately, they will be the first victims of the new system.

How your business handles unexpected intellectual property events will depend on how well prepared you are.

The best way to prepare for a possible IP disaster is to identify the intellectual property in your business early, protect it when appropriate, and monitor the marketplace for signs of impending doom.

Over the next several weeks, and in this month’s IP made simple Newsletter, I will be talking a lot about being prepared.  If you haven’t signed up for the monthly newsletter, you sign up here.

I hope you join me for the discussion.

If there are any issues that I don’t address and that interest you, please let me know so that we can talk about them in future posts.