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Patents,
Copyrights & Trademarks
October 4, 2005
Robert A. Spira
Patents have become increasingly omnipresent and for the
most part an ever more confusing undertaking. However,
this hasn’t stopped the ever increasing cascade of
people attempting to bring themselves riches beyond
imagination by grabbing the golden ring that is offered
to those insuring their ownership of critically
important concepts. U.S. Patent Number 5443036 is a
sterling example of man’s ingenuity and the Patent
Office’s willingness to grant an exclusive license to
distinctive and misguided concepts:
Method of exercising a cat
Abstract
A method for inducing cats to exercise consists of
directing a beam of invisible light produced by a
hand-held laser apparatus onto the floor or wall or
other opaque surface in the vicinity of the cat, then
moving the laser so as to cause the bright pattern of
light to move in an irregular way fascinating to cats,
and to any other animal with a chase instinct.
We are certain this is an idea that required substantial
reflection and was more than likely delivered to the
patent authorities with a working model. Not long after
the ct exercise mobile was approved, the ever
prestigious Harvard University was able to receive
official notice that they had earned the right to a
patent on a live mouse. Today everyone that is not
asleep at the switch in the technology chase, but there
are some proficient losers that are not hard to
identify.
Here at Chapman, from a venture capital point of view,
we attempt to separate the intellectual wheat from the
chaff; our people establish which projects of the many
we scrutinize are worth funding. This is a sort
Caesarean “Thumbs up/thumbs down” process of financial
engineering with numerous nuances to consider. Probably
the most vicious of all of the pitfalls that can
deprecate a patent is the simple fact that someone may
have filed for a similar patent a matter of days before
you did and this wins the lottery. Worse yet, you will
probably no even find that out for a least three years,
during which time, you factory will be turning out these
widgets in massive numbers only to find out that every
single one of them violates the rights of another
inventor.
So, this issue is not only whether the ideas is
worthwhile or not, the more important and unanswerable
question is, were you the first in the door? These are
the decisions that we are forced to make every day of
the week and the fact that a very thorough patent search
is conducted has little to do with the final outcome.
Sadly, the search is only going to tell you whether or
not a similar patent has already been granted but it
will not give you a clue as to whether or not, the
concept is in the pipeline.
We feel that our instincts are first rate in this
ultimate game of chance but we have proven to be far
from infallible; after all, we at Chapman are seriously
among those who said Federal Express couldn’t fly, that
Baskin Robbins would not be able to sell ice cream in
the winter, and that McDonalds could never be able to
vend hamburgers using mass production techniques. (this
was before the “have your way” concept originated by one
of their competitors). Although we’ve passed up such
choice morsels as the above, we are still worth talking
to, because we’ve had our share of winners as well, and
we are among a small cadre of firms doing early stage
funding. Although our competitors tell us counting on
the issuance of a patent is akin to playing Russian
roulette with all of the guns chambers fully loaded; we
have always tried to be on the leading edge, and we hope
that over the years, that is where we will stay, côute
que côute. Nothing ventured, nothing gained.
Moreover, in the process of getting intellectually
beaten up, we have developed a useful bestiary for the
less survivable corporate species that frequent Wall
Street. As bankers, our own survivability depends upon
our skill in recognizing these corporate mutations. Our
skill in classifying them is the result of dangerous and
bizarre experiences which we were, in younger days,
ill-equipped to grasp. As we have become, older, wiser
and more gray, we have learned not to give serious
credence to web-weaving visitors who have become
proficient at blaming their economic misfortunes on the
acts of others or those who are convinced that there is
someone just around the corner attempting to pervert
their concept. These phantoms of the night are
omnipresent to them and we have often had to reassure
these hopeless souls that our quarters are really
secure.
Another equally thrilling problem is the tendency of
numerous people to come up with the exactly same concept
at the same time. During the period of one-week we were
approached by exactly four different companies that told
us that they had patented a concept for using a CD to
both act individually as a magazine and connect to a
particularly site on the internet that would elucidate
on the subject in more detail. These folks came with
purported contracts from advertisers and in reality I
didn’t find any reason to doubt any one of them. They
were all extremely creditable. However, if we had not
known better we would have been entrapped by two issues.
The first is that filing a patent and receiving an
“issued” one are two dramatically different concepts.
The patent office sometimes takes over three-years to
let you know whether or not your concept is going to
make the grade. In the meantime, you are held in sort of
a deadly limbo unaware whether your are going to hit the
intellectual property jackpot or not. All four of the
groups when questioned in more detail admitted that they
had not as yet received a patent but had only submitted
their concept. We attempted to figure out which patent
application was the earliest filed but gave when we
realized that if these four all had the same idea at the
same time, there were probably another dozen out there
that had done the same.
It appears to us that there is an intellectual energy
force that causes people to gravitate towards certain
disciplines simultaneously. While we call this the
lemming effect, it is a very logical that based on
simultaneous technological advances, people will want to
combine the best of them and thus hopefully cash in.
While this is a very noble ambition, the world has
become intellectually sophisticated and for every new
idea, there are numerous people that are hoping to
combine it with something else before the pack gets onto
it. Sadly, this does not happen very often. Moreover,
there is a sort of Moore’s Law operating in the
intellectual property arena. Ideas, especially in areas
of intense research or those seemingly offering endless
economic riches are becoming overcrowded with a massive
number of pure opportunists that are attempting cover
the bases before the hoarders get there.
The victory doesn’t necessarily go to the brilliant or
the swift. People become more knowledgeable regarding
intellectual property, they can play it the same way one
would play the lottery put with potentially an even
bigger payoff. Once you get the hang of it, you can
knock out third-rate job in less than a day, maybe even
three or four hours. The cost is next to nothing.
However, even a solid patent on a great idea may only be
an opportunity of litigate and spend what little money
you have left, if you don’t have gigantic pockets and a
brother that is a litigator.
Seriously though, over time, we have also become skilled
at spotting managerial mutants who have unquestionably
created a potentially sizzling product, but who
adamantly refuse to share their secret because they are
sure we are no more trustworthy than their shadow
adversaries. We classify this species “homo sapiens
paranoius.” Intrinsically suspicious of potential
rescuers, they trust those who lack the time, the money
and the instinct to become involved in their
world-shaking concepts. This species is characterized
primarily by its incapacity to relinquish equity to its
own investors. Its motto is: “Trust me,” but its members
trust no one. While it would be easy to dismiss this
class as frauds or con-artists, its members are only
confused, and spend their mature years guarding the
little sanity that they have left. They imagine that
they are preventing extinction of their species by
hiding it from the world.
Almost 50% of the bearers of early stage concepts fall
into the class of homo sapiens paranoius. We recognize
this as an endangered species, but also recognize our
own inability to salvage it. The species is doomed
because competitor species will inevitably sideline them
by acting with impunity.
In spite of the fact that the above group has proven to
be highly resistant to common sense and for the most
part are present in small but vicious clans, venture
capitalists fear another species even more than the
paranoius. The particularly dread members of a clan
somewhat akin to the now famous Jutes of England, who
were so laden with genetic imperfections that they
accomplished nothing. Our sociologists and
paleontologists call them homo sapiens mañanus.
Generally, they are not highly educated, and while many
count manure carriers among their ancestors, these folks
do have interesting concepts now and again. They suffer
from diseases, such as tomorrowitis,
I’mnotgoodenoughitis or itwon’tworkformeitis. These
people think that they have something great within their
souls and are not shy about telling their friends at the
local pub how great their concept would be if only
someone worthwhile would listen, but they would never
venture out into the real world. If only this breed of
homo sapiens had arisen from the primordial goop, we
would still be trolls.
We tend to take anyone that has a concept seriously.
These are the works of many years and they are very dear
to the people that have come up with the concept. Some
of these ideas though are like the intellectual property
from hell. We give as sterling example the intellectual
property that was filed in the British Patent Office.
SMG's woolly patent failure by Perry Gourley
Published: Aug 19, 2002
A WOOLLY attempt to trademark a pair of socks by the
media group SMG has unraveled in the latest in a series
of bizarre moves to safeguard everything from a football
chant to a whisky bottle.
The two sock characters, one wearing a Rangers scarf and
the other a Celtic one, emulate the famous ITV-Digital
monkey, and feature in a television advert to promote
the coverage in the Evening Times of the Old Firm teams.
An application by SMG was made to the Patent Office to
protect the socks from unwelcome advertising predators
but the trademark was not granted.
A spokesman for SMG said it had decided not to proceed
with the application after the Patent Office "came back
to us with some comments." She stressed that it may
decide to reapply in the future
Applications can be refused for reasons including
lacking the "distinctiveness" expected, or if a similar
image had already been registered by someone else.
The trademark would have enabled SMG, headed by its
chief executive Andrew Flanagan, to protect the socks
for use on products including bed covers, umbrellas,
pencil sharpeners and even underwear.
While we would certainly give the SMG Group a solid “A”
for effort, their abortive patenting attempt shows that
at times people “out to lunch” when filing. However,
while most of those attempting to tie down intellectual
property of both serious and thoughtful, sometimes a
red-herring is placed in with the caviar by this small
but highly vocal group. This sect is a sub class and has
been given the nomenclature of homo slothopiens. These
are folks that are more interested in wasting the time
of others rather then do some serious thinking when it
comes to inventing.
The last category of those that we see are those that
want to take our money from us without giving anything
back. Even the Nigerian’s have entered this arena in a
vengeance.
hello,
I am writing you of a wonderful business oppertunity in
nigeria. my father was gumbo
aiduiuda creator of the patent for e-commerce.
i am the rightful heir to the fortune that has become
him. but being persecuted by the regime of douy, cheetum
and howe, i cannot move th money out of nigeria.
in exchange for the use your bank account i am willing
to share 20% of the sum of $3 billion dollars. Please
kep this in condenser and send bnk account numbers.
gumbo aiduiuda junor
So, we have run the gambit from the lazy, the paranoid,
the criminals, dim-witted and the useless. We will only
deal within this article the serious applicants in spite
of the fact that they may be highly misled and confused
for a variety of reasons primarily caused by the higher
ozone level caused by global warming. These folks are
characteristically similar.
Such companies present us with voluminous non-disclosure
agreements that forbid us from giving investors enough
information to fund the product. Frequently the same
lawyers who draft these complex documents fail to tell
management about patenting concepts, software and
business methods. Instead, counsel just advises managers
not to discuss their program with anyone who refuses to
sign an airtight non-disclosure. Counsel tells the
inventor, who does not know the difference between
patent counsel and Santa Claus, not to trust anyone and
then probably charges an arm and a leg for the advice.
Secrecy is OK if you are living in a vacuum in outer
space, but is a recipe for disaster on Wall Street. The
United States Patent Office says that a patentable
product doesn’t have to have strange looking wires
hanging out from its tentacles or give off a bluish
sheen during electrical storms. It can be just a novel
way of getting from here to there by foot. It can also
be a unique ring for the telephone, a new dial on a
space heater, or new hair styling method.
Thomas Edison was certainly a bright sort, but in spite
of what we have been led to believe, was he really a
great inventor? No that the evidence is starting to come
in, it appears that he was not. However, that is isn’t
to say that he didn’t have aptitude for advancement and
substantial knowledge of his surroundings and how they
operated. It would appear that he had a tad more than
workman-like knowledge of science but real Edison’s
forte was his thorough understanding of how the patent
office really functioned.
He utilized this somewhat constricted window of
knowledge and applied to his unique talent of knowing in
the field of science was working on what to beat his
competition to the cash register. Edison was able to
manipulate the intellectual process to degree probably
never before seen either before or since to make himself
both rich and famous. Not only did Edison manipulate the
patent office like it was a greased accordion but his
staff produced public relations proclaiming his
greatness that would have put P. T. Barnum to shame.
Great scientists such as Tesla, who was a truly amazing
physicist, were forced to take a back seat in to Edison
as it relates to their own inventions and ideas. Edison,
was a scientific second story man that directly stole
other inventors’ ideas and then had them issued to him
in his own name by slapping his name on those concepts
and filing them in the patent office. When push finally
came to shove, the inventors couldn’t even use their own
inventions without paying the street-brilliant Edison a
toll. Worse yet, most of his competition died both
anonymous and broke with nobody ever knowing who they
were or what they had accomplished.
The days have long since vanished when one man could
totally dominate and manipulate the U.S. Patent system
but it is still little understood and insurance in the
form of patent protection is still not the most
important part of an invention in many people’s minds.
Interestingly enough, an inventor would hardly be
without some sort of health or life insurance to protect
his family and yet, when it comes to the protection of
his livelihood, he is more often than not, asleep at the
switch.
We have recently become a much more sophisticated
society in which information is now at everyone’s
fingertips through numerous sources including and most
importantly, the Internet. A filing for almost
everything that is conceivable is now available on the
web; usually in the most simplistic of formats.
Moreover, while Edison had to travel to Washington by
carriage to do in his co-inventors, intellectual
property insurance can be purchased at a very low cost
right from your living room. In today’s society, to some
degree there are certain protections available for
everything you can think of, fire, tornado, life and
health insurance protecting you body and your home,
derivatives that provide financial insurance and laws
and statutes that protect your religious beliefs your,
civil rights and your right not to have to testify
against yourself. Indeed, everything is fair game to be
protected; however, many folks spend a good part of
their adult lives nurturing a dream, and then risk
losing it because they didn’t know how to protect it.
Paradoxically, they are willing to disclose everything
to an attorney they have never met, but are unwilling to
share the barest details of their amazing concept with
people who may be willing to put up money to take the
concept to the next level.
When these folks come in, we tell them to either freeze
dry and shrink-wrap their invention and forget about it,
or find themselves someone who can write it up and get
it properly protected. This is not the perfect solution;
there isn’t one, but if you can’t trust Uncle Sam’s
Patent Office, who can you trust?
The patenting process does, of course, have its flaws.
People have a real resistance to paying patent filing
fees. This goes hand in glove with the normal paranoia
about exposing their baby to the world. They are wrong
on two counts: first, a legitimate law firm specializing
in intellectual property does not charge outrageous fees
to file a patent. Second, if people are really concerned
about getting ripped off, they can file the bloody thing
themselves. There are programs out there that will give
you the basics and the Patent Office has become very
user friendly. The cost is just some time and a minimal
filing fee.
Talent scouts and investment bankers have a lot in
common. I used to hang out with theatrical agents, and
my friends who had gifted girlfriends would ask me to
get them auditions. If they were close friends I would
try to help them understand the process. The first
question the talent agents would ask was, how old was
the lady, and the second was, where did she live? The
only right answers were: 19 or younger and living in New
York. My friends often asked, “What kind of criteria are
those?!” The answer was brutally logical: if the woman
hasn’t found her way to New York by 19, they felt that
she didn’t have the fortitude to succeed in show biz.
Even if you are ultra talented, you have to be where the
action is.
In the business world, you also have to show that you
think enough of your own product to have covered the
bases.. We review at least three different proposals and
do at least 1 ½ “dog and pony shows” with inventors
every day. There’s plenty of amazing stuff out there
that is good enough to knock our socks off. We don’t
need to buy neuroses.
Wall Street’s brutal midwifery favors simple financial
arrangements, even when the product is ingenious. We
worked with a fairly bright guy from Arizona who came up
with what we still believe is an absolute cure for
cervical cancer. However, he was so afraid of losing
control over the formulation, that he created layers of
trusts totally controlled by him that made any exit
program usually required by unaffiliated investors
absolutely unfeasible. When I objected to getting only
shares in a trust that he controlled in exchange for a
substantial amount of money, his comment to me was that
“all Wall Street people are out to steal from the little
people”, and he was not going to let that happen to him.
I think that he died without ever funding the cure, and
his invention died with him. He knew better.
The bottom line of this treatise is simply the fact that
we do not want to really talk to people who require
non-disclosure statements from us. We are fiduciaries
and cannot properly represent and evaluate the product
with our hand tied behind our backs. When we tell them
that they say: “Well, that is what my lawyer told me to
do.” Our response is simply, “have your lawyer put up
the money your company needs then.” We would prefer to
be neutral on the subject and to evaluate what actions
the client is to take, to determine if his product has
commerce applications, if it is protectable and a list
of those lawyers that can help him do it, provide him a
list of firms that finance notable achievements is the
particular field of endeavor he has chosen and how to
best negotiate with the money folks. This would indeed
save everyone a lot of time.
We have formed an intellectual property consulting firm
with this concept at the forefront. The firm is called
Intellectual Concepts and has been formed as a Delaware
Corporation. It will be able to call upon the resources
of some of the most astute people in the field today.
Moreover, it is our strong position that in a high
percentage of the cases we will be able to take our
clients to another level in this field by helping them
create something far beyond what they had originally
proposed. Our motto is simply that no client will ever
leave this firm with a product that has not been
substantially improved by our people. That, they will be
enhanced for the expertise that we offer and hopefully
will knock-them-dead with our help.
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