ContactDesign Patents
Posted Wednesday, April 08, 2009 by Jim Ruttler.
Design patents are a special kind of patent that protects the ornamental features of an existing article. For instance, a design patent might cover uniquely shaped sunglasses, tire tread, or drink bottle even though the underlying product may be well known. Design patents are therefore different from the more common utility patents because utility patents protect the underlying product or process regardless of any ornamentalities.
A recent study by Dennis Crouch of PatentlyO.com found that of 1000 design patents issued in March of 2009, only around 25% received a rejection during examination. While this doesn’t consider the number of rejections that are received for abandoned design patent applications, it does show that design patents are significantly more likely to register and have a smooth examination than utility patents. Initial rejections in utility patent applications can approach over 80% for many art units like ecommerce. Moreover, the study shows that design patents are issuing in approximately 15 months after filing, which is very quick as the USPTO goes.
Patent Trolls
Posted Wednesday, March 18, 2009 by Jim Ruttler.
The term Patent Troll is commonly used to describe somebody who obtains a patent and then deviously waits to “ambush” an innocent victim who commercializes the invention. The argument generally goes that Patent Trolls contribute nothing and wrongfully extracts value from companies who actually make things for society.
This position ignores several facts. First, the so called Patent Troll received a patent because he or she was arguably the first person to conceive of the invention. If the “innocent” producer wants to be the first to file a patent application for an invention, there is absolutely nothing stopping them from doing so prior to the Patent Troll. Second, most patent applications undergoing examination and all issued patents are publicly available and searchable without any charge from the U.S. Patent Office website. Thus, it is hard to make the argument that one is an innocent infringer when the patents being infringed are readily available without any charge directly online. Third, there is inherent value in introducing new ideas to into the public domain because doing so enriches the standard of living for everyone over time more quickly than were new ideas not rewarded or kept private.
My impression is that these Patent Troll complaints are misdirected as the core of the problem resides outside the practice of awarding patents to the first inventor or sitting on issued patents. For example, the “innocent victims” could address some of the problems they complain of by dedicating resources to monitoring pending patent applications and issued patents prior to embarking on multi-million or multi-billion dollar projects much as a land developer would verify title to property prior to building. It would be silly to hear of a land developer complaining of losing a building he built to the actual property owner because the land developer failed to learn that the land he was building on wasn’t his to build upon. Also, tighter, timelier, and more thorough examination would help to avoid the circumstances where questionably new inventions were granted patents. There are many times when patents are granted for questionably new inventions and these patents can cause severe economic loss to companies who are forced to defend themselves for using old technology. If patents were reliably issued only for truly novel innovations and contributions to society, then it would be hard to hear complaints against having to compensate the true innovator. Lasltly, efficient markets for intellectual property would help avoid the difficulty that most patent owners face in selling their patents. It is hard for me to believe that patent owners would prefer to hire some of the most expensive attorneys around to sue another company for infringement with the risk of losing the lawsuit over selling or licensing the patent to the company at an earlier date. The problem for most patent owners is that there is no truly efficient market for patents as there is for stocks and land and that it is easier to wait and sue a company than to sell the patent in the first place.
In short, the real issue isn’t with so called Patent Trolls ambushing innocent producers, rather it is with the questionable patents that issue, the lack of market efficiency, and the current practices of embarking on signficant ventures without due diligence.
Starting a New Business
Posted Tuesday, March 17, 2009 by Jim Ruttler.
Due to circumstances arising from the economy, many individuals are considering starting their own business. From my own personal experience, I know that this can be a very challenging and rewarding endeavor.
From a business perspective, in addition to having a product or service that is needed in the marketplace, I would primarily recommend having sufficient reserves available to last until the business can provide the distributions necessary for survival. When there is a demand for the product or service and sufficient financing to bring it to market, all other issues will work themselves out.
From a legal perspective, consider forming a corporation, filing a trademark application for any marks, and filing a patent application for any new inventions. The corporation is important because it conveys establishment to potential customers, provides an organizational framework, and insulates personal assets from certain liabilities arising from the business operations. The federal trademark application protects a business name, slogan, or graphic from infringing uses across the United States. It takes about six months from filing to registration assuming things go smoothly. The patent application preserves invention rights in an invention as of the date of filing, and once issued, protects against the making, using, selling, and importing of infringing products. The patent process can span anywhere from six months to multiple years depending on the procedural route taken.
Next Generation Law Practice
Posted Tuesday, March 17, 2009 by Jim Ruttler.
Last week I commented on the problems that Big Law Firms will face in the coming years because of the unsustainability of their business models. While some well run larger firms will continue to exists and successfully service some larger clients, a new model will begin to thrive and prosper by providing high quality legal services at much more reasonable rates. This new model will be a loose affiliation of independent lawyers or small groups of lawyers specializing in a particular practice area. The independent lawyers may be geographically dispersed across the country or even the world and will likely work from home or otherwise out of the office. They will service their own clients utilizing a central office space, which may be shared with others, and also will assist multiple other lawyers in servicing other clients, whenever the lawyer’s specialized knowledge is required. When the need arises, lawyers can come together as a unit using technology to work on a particular project and then can disband and work with other lawyers on other projects. Lawyers will become discrete knowledge centers that can be tapped by clients and other lawyers utilizing technology whenever that knowledge is needed and lawyers will survive on their legal abilities as well as their abilities to market themselves in a competitive environment.
The Disappearance of Big Firms
Posted Sunday, March 08, 2009 by Jim Ruttler.
It has been apparent to me for a number of years that the traditional big firm model is unsustainable. However, I think the Big Firm demise will be quicker than I previously thought due to the deterioration of the economy. The traditional Big Firm for which I’m referring operates in large and expensive office space that is lavishly decorated. In order to service the expenses associated with such office space, billing rates are absurd and armies of associate attorneys and staff are leveraged and tasked with the goal of billing as many hours as possible at the client’s expense.
The reasons that I believe these operations are unsustainable are as follows.
First, because of technology, large and expensive office space is no longer necessary for the practice of law. Attorneys spend most of their time in the office researching, writing, thinking, and conferring with others. This work can easily be accomplished away from the office using a computer, internet connection, and phone. And, for the times where meeting with clients or working in the office is required, a smaller equivalent type of office space can be utilized.
Second, the competition is placing downward pressure on billing rates. The technology referenced above is making it possible for attorneys to provide high quality services with less overhead, which translates into lower billing rates. These high quality lower cost alternatives put downward pressure on the billing rates and fees of Big Firms.
Third, younger attorneys who are comfortable with technology and prefer to work more independently are arriving on the scene. It takes many years of schooling to become a lawyer and often some work experience to be admitted to law school. Consequently, it has taken longer for technologically adept lawyers to infiltrate the bar than has occurred in other professions. But, these attorneys are now being admitted in waves and as they become established in the profession, they will begin to question the wisdom of fighting traffic each day and paying downtown parking rates to sit in a high priced office space to read and write.
Fourth, modern clients are demanding more personalized and specialized attention. Big Firms operate in a similar fashion to a manufacturing company. Raw materials (client needs) are input, an assembly line of machines and workers (associate attorneys and support staff) transform the raw materials, and a finished product (legal work) is output. While this may be the most effective way to generate profits for Big Firms, it is not aligned with the needs of the modern client, which are high quality, timely, and cost effective legal efforts that are tailored to the client’s personal and specific needs.
Fifth, given our current economic climate, clients will demand more for less. The need for legal services will continue to be present so long as we have a functioning civil economy. However, the resources of clients are no longer as abundant as they once were and clients will begin to consider lower cost alternatives to Big Firms. These include hiring in-house attorneys, contracting with attorneys, off-shoring legal work, and working with attorneys that are utilizing technology to provide more efficient services.
In summary, the disappearance of Big Firms in their current form is inevitable and will accelerate in the coming years given our economic slowdown.
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