SECOND IN A SERIES
By James F. Riordan
Do patents offer inventors more than simple protection? Of course they do.
First and foremost, the small businessperson or individual must think of the patent as a marketing tool. Without a patent having been applied for, a small businessperson has little chance of selling or licensing the product to a company capable of manufacturing it. Most companies simply don't want to talk with you unless the product is at least in the "patent pending" stage. As a result, the patent is used as a marketing tool by the "little guy" until the product is sold to the "big guy." Only after the sale to the large company does the patent become a formidable form of protection.
Additionally, the patent is used as a marketing tool by entrepreneurs who wish to produce their product themselves and then sell their product to retail stores and through other channels of distribution. The term "patent pending" stamped on your product opens doors to retail stores and mail order catalog houses, since they then perceive the product as one which will probably not be immediately "knocked-off" by a bunch of other companies making "me too" products.
Without a patent, many of the larger retail chain stores will be skeptical of carrying the product unless you sign an "indemnification agreement" which states that you will provide the store with a lawyer if the store is sued for infringement. If you have a patent issued or pending, many stores will waive the indemnification agreement, because they believe, falsely, that your patent automatically protects them. The value of the patent as a marketing tool must be carefully weighed against the cost of the patent to determine whether the benefits will justify the cost. Unless a product is a fad-type product, I have found that in most cases, when the potential for success looks good, it's well worth it to file for a patent.
A person or company can file for a patent for two totally opposite reasons:
1) As a SHIELD (Defensive Weapon)--If you simply want to protect your idea, you would file for a patent as a shield.2) As a SWORD (Offensive Weapon)--If you wish to act as an aggressor toward one of your competitors, you may wish to file for a patent as a sword.
The SWORD approach is used in direct competition with another company. For example, Company A comes out with a product which will help them take market share from their competitor, Company B. Company B may choose to retaliate by modifying one of their existing products to compete directly with Company A. In this case, Company B files a patent as a sword, sticks a patent pending sticker on it and immediately takes the product to market. Company B might even be fully aware that they have little or no chance of the patent ever issuing. However, Company B files for the patent strictly to confuse Company A and to give themselves some breathing room to get their product on the market before Company A can check the claims in the patent.
It also give Company B time to sell the product before Company A can notify them to cease and desist. Usually, the company with the most money wins this kind of duel. When the duel is between a large company and an individual, unless the case is blatant infringement, the chances are good that the big company will win one way or another. For example, a large company with offices in different parts of the country can file lawsuits against you, in cities on the opposite coast from you and cost you so much money in attorney's fees and travel expenses that it becomes financially impossible for you to do battle with them, even if you're right.
The very first step you should take when you think of a new idea is to write it down in a "sewn and bound" inventors notebook and have the page signed and dated by a witness who understands the invention (the witness should be a non-family member).
The next step, if you think the idea has potential, is to file a "Record of Invention" Form with the Disclosure Document Program. Filing this form will establish a legal date of conception for your invention. That can be very critical if another party's patent issues before yours, because if your disclosure document proves that you thought of the idea before they did, they'll lose their right to the patent and you'll be granted the patent.
It happened to one of my clients and worked to his benefit, so I'm a firm believer in the disclosure document program. Take advantage of it.
NEXT ISSUE: More on Patents
The above article was taken from James F. Riordan's classic book, HOW TO EVALUATE THE POTENTIAL FOR SUCCESS OF A NEW PRODUCT OR TECHNOLOGY. Riordan's highly-acclaimed, 36-point system is a valuable tool for inventors, product evaluators or anyone interested in the invention process. Each section is followed by a comprehensive questionnaire that can be used to evaluate your product.
The highly-recommended book can be ordered by contacting the James F. Riordan Company, 3110 Camerosa Circle, Cameron Park, CA 95682. The company can be reached by phone at (916) 676-4729. The book may also be ordered through the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501. The phone number is (310) 328-1925.
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