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CONTENTS:
Reference materials
Employed or Retired Inventors -- beware, your employer may
own your invention. Self
employment may not be an
excape.
Record Keeping
Disclosure Document
Provisional Patent Application
Reasons for patenting, or not-patenting
Manufacturing and marketing tips
Negotiation red flags
Anticipate losing control of your invention and/or business.
Considerations about Licensing, Assignment, Joint Inventors, Incorporation,
Negotiating.
Obscure, but key points to consider in any contract, and business
dealing.
References
......................................................................
GENERAL INFORMATION FOR INVENTORS AND ENTREPRENEURS
By Bruce Ross, PE, EE. (an Engineer, not an attorney)
4/17/92
Rev 2/18/95
Rev 8/8/96
Reference Material:
PTO website = http://www.uspto.gov
The PTO website has page specifically designed for the independent
inventor.
There are several excellent books available on how to prepare a patent
application. Even if you are planing to use an attorney or agent (An
engineer licensed by the PTO), it is always in your best interest to
understand the process. I find "Patent it Yourself" by David Pressman,
Nolo Press about $55 to be useful, easy to read, and understandable,
has patent forms and good information about dealing with outsiders in
developing or selling your invention.
Last known edition is 5th Edition, August 1996. Patent It Yourself is
very common in public libraries. They seldom have the newest edition.
One change in the new edition is "Provisional Patent Applications", which
became law in April 1995.
The Manual of Patent Examination and Procedures (MPEP) is the guide and
rule book used by the PTO in patent matters. It is well worth the price
for a subscription if you are going to deal seriously with an invention
whether you make application yourself (pro se) or have an agent or attorney
do it for you. The PTO website posts the latest edition of the MPEP in
PDF format. They also carry older edtions.
Your library may have copies, many do.
------------
Employed or Retired Inventors:
If you are employed, recently employed, or retired on a company funded
pension, you should evaluate the status of your employer's possible claim
to your inventions. There is often a clause in employment contracts
requiring you to assign ALL rights of ALL patentable and most other ideas
to your employer. Absence of a written contract assigning patent rights
is no protection. Your employer has, under long standing precedence, the
ability to claim such rights, including independent work and inventions
not related to the employer's business or your job. These old rights
have been eroded by more modern court decisions and in some states by
statute. In any case, it is a subject not to be ignored. The
retention of "shop rights" is very common and some peculiar things can
stem from shop rights, in particular, possible loss of the 50% "small
entity" discount of PTO fees, and the fact that you cannot sell or
promise total exclusive rights to your invention because you do not have
100% control. Companion to invention rights, are various contracts that
may restrict your actions under the doctrines of "Non-Compete, and
proprietary information", some of which may be contrary to local law.
Attorneys and employers are not beneath asking you to sign an
unenforcable contract. The contract, enforcable or not, still
represents your word and may be held against your reputation if you break
the promise.
If you believe you may be working under such a hazard, seek advice from
a competent attorney, usually one specializing in labor law and/or
intellectual property law. As a practical matter, your employer and
former employers may be your best bet for backing. They know you. If the
invention relates to his business, it is a natural relationship, or he may
acquire it as an expansion product. If he does not pick it up, your
attorneys likely will recommend obtaining a release or quit-claim. If
the employer intends to lay claim to ownership of the idea and freeze you
out, there are several actions that you may take to increase the difficulty
and may help persuade reasonableness.
Washington and a few other states, including California, have State
laws limiting the "rights" of an employer to appropriate your invention.
In Washington, the law is RCW 49.44.140 and 49.44.150 . FEDERAL law is
silent and does not provide any protection against the employer laying
claim to the employees inventions, even though it has no relationship the
job, employer's business, or to his participation in paying any of the
costs of development. Washington Law is unclear whether the limitations
apply when there is no specific contract, when there is no patent
assignment clause in the employment contract, or to contracts executed
before the statute was adopted. ABSENCE OF A WRITTEN EMPLOYMENT CONTRACT
IS NO PROTECTION ! The "right" to appropriate an employee's invention is
very old, older than the United States, going back to old English Common
Law. In theory, you could lose it
all, including the cost of obtaining a patent. BEWARE!!! Seek advice
then obtain a release (quit claim). In general, you probably should not
try to hide your invention from your employer unless advised by competent
council. Many attorneys, including corporate legal staffs, are not
competent in this field. DO NOT EVER rely on ANY advice or opinion from
your company's legal staff. They represent the COMPANY, NOT you or ANY
of your interests. Your employer's attorney will surely not be candid,
and may even lie to you or bully you. This is his view of his "best
service" to his client. Few corporate lawyers seem to be aware of the
Washington State laws referred to above. Employment contracts often
contain the language forbidden by those laws, maybe for bullying purposes.
If so, they may not be
enforceable, but can be used against you as your promised intent. At
minimum, a bully attempt will be made to get you to recognize the logic
and promise to "see the light (theirs)".
Self Employed, Partnerships, Your own Corporation:
Being self employed (proprietorship) or employed by a partnership or
corporation which you own or are a substantial partner is not necessarily a
protection. It is possible that some one, probably because of a fight
among partners, divorce, bankruptcy, lawsuit, death of a partner, sale of
the business, or liquidation could reach down through your employment or
connection to lay claim to your invention unless you have a contract
separating your invention from the employment situation. It appears that
retaining personal ownership of the patent and licensing it to your
business may be in order.
-----------
Application:
The patent application may be made only in behalf of the inventor(s).
ALL INVENTORS must apply jointly, and NON-INVENTORS CAN NOT be included.
Failure to include all, or inclusion of non-inventors may subject the
patent to cancellation. Your supervisor or boss is not eligible for
listing as an inventor simply because he is the project supervisor or boss,
or that he or the company is the sponsor. To be an inventor, he must have
contributed innovation to the actual invention, and that innovation must be
part of at least one claim. Do not let him bully you or otherwise horn in
on the patent. The patent application requires that the inventor(s) swear
to their inventorship under oath. Occasionally, one of the inventors
(maybe yourself) leaves the company before the patent application is filed
and the company "forgets" to name him as an inventor. THIS IS ILLEGAL as
well as unfair!
Assignment of rights, ie the de-facto ownership, to the patent may be
made at the time of application, but may be at any time. This is usually
to the person(s) or company that paid for the development of the idea
and/or other costs. If there is no assignee, the ownership is shared
equally among the inventors. Proportional ownership, buy out, and other
arrangements may be made by contract. A joint Inventor's agreement
setting forth the ownership, a working relationships, and a proceedrure
for disolution of the "partnership" is recommended. Consult an
attorney.
A patent, and presumably the application, is defined in Federal law as
"having the attributes of personal property" (35 USC 261). That
definition carries wider implications.
Examine any assignment document carefully. Often they extend to all
subsequent inventions, applications, and patents which may extend from
the present invention. Again this is assignment of inventions not yet
reduced to practice. Balk. Each can easily and appropriately carry
its own assignment based on the merits.
Record Keeping:
The invention should be recorded in writing as soon as it is conceived.
Notes, analysis, sketches, descriptions, and other material, even failed
experiments and crackpot ideas should be recorded, preferably in a sewn
binding notebook with factory printed page numbers. A spiral note book
will do but does not carry much credibility. Loose leaf notebooks are not
considered reliable. Cross references to and within in the "good" binder
will help when such lesser binders are needed. All of this is to lay
evidence to when the idea was created in case of conflict with parallel
inventors. The quality of evidence lies in it being timely entered and
plausible in organization. ie, the disorganization of the real world is
preferred. Perfectly organized books may be suspected to have been
created after the fact. The joint inventors, if there are any, should be
identified when they contribute. They and their contribution should be
noted in a timely fashion.
Disclosure Document:
Somewhere along the process, the idea has become a potential reality.
At this time, it should be written up in as much detail as possible.
Include all ideas that might be patentable, all peripheral uses, and as
much of the history of the art and invention as practical. This is not a
patent application, and perfection is not needed, hand written is ok.
However, it is another evidence of originality and anything may be said or
assumed to be original. Proof comes later. The most pertinent pages from
the notebooks may be xeroxed for inclusion. More than one idea may be
included (piggybacked onto one filing fee). Two copies are mailed to the
Patent office Disclosure Program with the fee ($10.00). They record it
and keep one copy for two years. Upon request, the disclosure may be made
a permanent part of the patent application. The other copy is stamped and
returned to the inventor. While the Patent Office discards their copy at 2
years, the inventor's copy never expires, although its usefulness obviously
fades with time.
The disclosure is one of the best ways to first communicate your idea to
your patent attorney. The better it explains the idea, the quicker he
assimilates the concept and you save money. It may even be the bulk of
the text of the application if well done. The disclosure writing process
has a side value in that it is time and cause for a step back to examine
the invention in its entirety. A clearer understanding of the invention's
scope and value usually results from this introspection.
Several disclosures may be filed as the invention progresses. There is
no need for additional disclosure after the patent application is filed,
and there is probably no need for filing additional disclosures once the
job has been turned over to the patent attorney. Some attorneys say that
there is no need to file disclosure documents with the Patent Office,
filing it with them is adequate. In most cases, this is probably so, but
there are advantages to using the Official system.
1. Unequivocally neutral depository.
2. It is independent of your choice of attorney and preserves your
ability to choose another attorney.
3. Investors and others who may have interest in your business seem
comforted that "steps" have been taken with the Patent Office.
Provisional Application:
A new patenting step has become available in mid 1995 called a
"Provisional Patent Application". A provisional application is not an
application, but is a legally recognized registration of an invention for
obtaining a "filing date". The Provisional Application must be a complete
disclosure in conformance with USC 112. A complete, well done disclosure
document usually will be in adequate USC 112 form for provisional use.
Other parts regularly required in an application may be omitted. To be
permanently effective, a regular application must be filed within 1 year
and must not contain new matter. In effect, it is a super $ 10 disclosure
document for $75, but it also carries the privilege of establishing a
filing date and the privilege of marking your invention as "patent
pending". The Provisional Application will probably completely supplant
and replace the $10 disclosure program.
The primary need for the existence of provisional applications is that
the United States has chucked 200 years of experience and legal precedent
as a "first to invent" country in favor of the way it is done in Europe and
Japan where "first to file" is considered the legal inventor. This is
important only when there is simultaneous independent invention.
Should you patent your idea, and when:
Maybe. But you should file a disclosure and do a short patent search.
Your financial backers, in-laws, and other kibitzers will consider it
prudent, It will squelch a few of their snide comments.
The short search should come up with one or more of the following answers:
The idea may be unpatentable for several reasons. It may be protected by
a current valid patent. It may appear to be unique and thus more likely
patentable.
Reasons for immediate patenting - To obtain foreign patents, many
countries require that the application be filed before marketing.
The idea is so good that it needs and can support the cost of protection.
Filing the application is the best and surest way to corral your idea and
expansions of the idea; the sooner the better. The single most valuable
method of establishing your interest in an invention is the application.
The first to file has the strongest argument, although other data such a
notebooks and the disclosure documents are powerful in establishing date
of innovation and should not be neglected.
A patented idea may get past the corporate guard-dragons (see marketing
below) because the idea is bounded by the patent which is public
information, the corporate exposure to real and imaginary risks is nil.
A well done disclosure and/or application may also do so, but is less
precise, and being non-public information, creates more corporate
exposure than many corporations will tolerate.
A patent or two on your resume may pay for themselves in career
advancement. Listing some disclosures looks almost as good.
A patent is a property that has cash value. In fact, the PTO publishes a
list of new patents for which licensees are solicited.
Reasons for delaying patenting - You have 1 year after "publication"
(describing or offering for sale on the open market) to file a patent.
The cost of a patent is high, approximately $1,000 in Gvt. fees, $3,000
$10,000 in attorney and related costs. This money will go far in
setting up your business. Then, if your business shows promise, the
patent costs may be worth spending at that time.
If you have the inclination, consider filing it yourself. Perhaps have
your documents reviewed by an agent or attorney. You can put several
people on the payroll for the cost of attorney hourly fee. You can
completely botch the job and have it rejected 10 to 20 times, each time
requiring a new application fee for the cost of one non-guaranteed, even
against their goof-ups, attorney preparation.
Provisional Patent Application:
Inexpensive interim protection --
A new filing is available for $75 called a "Provisional Application".
It does not in itself result in a patent, but is treated as an application
and you get:
A. The right to use "Patent Pending" on your product.
B. A foreign filing license.
C. An application filing date.
D. Preserves some rights to file in Europe and other countries.
E. Your Invention is documented with the PTO.
F. Buys time, up to 1 year.
No patent or property rights are conferred.
A provisional application is the portion of a patent application titled
"Detailed Description of the Invention" with complete drawings. It can be
very informally done, but must be complete per USC112 to be totally
effective as a pre-filing. The regular application for patent must be
filed within 1 year or the Provisional Application expires.
Reasons for not patenting - The idea may have a short market life.
The idea may so simple that it is easily duplicated or re-designed.
Getting to market first may be the best protection.
The idea may be complex and can adequately be kept secret, or require
specific pre-requisite knowledge or equipment which would increase the
start up costs for others.
The idea may have a small but appreciative market to which you have
special access.
So there is an infringer, first you must find out about it, then SUE and
WIN. Since enforcement is costly and iffy, the monopoly value of a
patent may not be practical to utilize unless the product is a good
revenue producer. The court can also rule your patent invalid.
A patent application is a gamble, the prized concepts may not be
patentable. Not all applications result in really useful protection.
Many applications never do convert to a patent.
Your money may be better spent setting up your business.
If you market a patentable invention, but fail to patent it, it becomes
public and any one else can also use the idea, but NO ONE can EVER patent
it. You may have competition, but cannot be stopped from using it.
Manufacturing and Marketing:
Many inventors are not adept at either marketing or manufacturing, and
seldom both. The notable exceptions usually are an established business
man who has invented something that fits into his on-going business
practices.
Getting your invention inside a large company, unless they find it in the
market place or other display and come to you, is more difficult than
getting past the guard dragons in the personnel department. Two major
concerns block your access. 1. Legal considerations. If they happen to
be considering something similar, and they look at your proposal, their
lawyers will immediately sweat and holler that you will soon be coming with
a appropriation of knowledge suit. So the lawyers advise " Do not look at
any outside proposals! EVER!". Conserves sweat. 2. NIH considerations.
The engineering department universally will privately consider "why didn't
we think of this, after all that is our job. Reject it! Discredit it!
Kill it!; before any one thinks we have been goofing off."
There is hope, and good professional advice available for slaying corporate
guard dragons.
Negotiation Red Flags:
Last Cautions ---
If you assign, license, or sell your patent, be sure that you ARE NOT
obligated to "defend or maintain the patent". At minimum, maintenance
involves the payment of renewal fees 3 times during the patent's 17 year
life. These are several hundred dollars each. Defense clauses are a
hole in your pocket. Worse yet, if you are held responsible for
defending against infringers or the validity of the patent, there is no
practical limit to the costs. If there is a problem, YOU may have to pay
the court costs, and possibly damages to the assignee or licensee(s).
Make sure that these responsibilities are theirs NOT yours. Get it into
the CONTRACT. Also make sure that you have some way to foreclose on the
agreement, especially if the payments are mostly royalties. For several
reasons, the licensee or assignee may not put or keep the invention on
the market, thus no royalties. Simplest solution is to require a
guaranteed minimum annual royalty. This can be the string to abrogate
the contract and pull the invention rights back, (ie recision, or
reposession). On royalties and time payments, --- NEVER, NEVER, NEVER, EVER,
NEVER tie them to "profits" on the invention. Since charges and costs can be
assessed in a great variety of innovative ways, there never will be any
profits upon which the royalties depend. Use some simple easily verified
criteria such as fixed $ per unit, % of wholesale price, etc, AND an
annual minimum payment. % of price may be best because it puts you into
the mark-up equation and is indexed to inflation, but it is also indexed
to price reductions which may result from market forces and improvements
in productivity. If your invention is only part of a larger device or
system, carefully tie down how the split is determined. If you can, keep
it at 100% of system cost even if the % of royalty is smaller to
compensate. There are more ways to be cheated than you can possibly
imagine and it is usually impossible to negotiate an air-tight deal.
Include some mechanism for auditing the base data. You may never have to
exercise an audit, but for obvious reasons you need the rights to do so.
Generally avoid overtly trying to cover too many obscure or remote
possibilities. It is usually taken as a sign of distrust and possible
trouble, a deal breaker. An accountant and a successful businessman
should also be consulted early and again before finally closing the deal.
Never let your attorney negotiate for you. Use his advice, but not his
service. They cannot strike a compromise for several reasons. They are
not called "deal breakers" for no reason.
Remember, when dealing with anyone on money matters, engage a GOOD
attorney, usually one specializing in intellectual property. Books on the
subject generally advise that you not let your attorney do any direct
negotiations on business matters. Most have no experience whatsoever as a
permanent employee or manager in a production or distribution company.
Especially, do not let him talk directly to the other side's attorney(s).
These guys like to argue over legal trivia on your per hour fee. Make your
basic deal businessman to businessman, but keep in constant touch with your
own attorney. Be very wary of your own attorney's advice. His job as he
sees it is to represent you and your position relative to LAW, not good
business and common sense. Bringing him to the critical meetings is
expensive to you, but sometimes intimidating to the other side, especially
if they are trying to pull a fast one on you. There are several simple
rules to negotiating but these are beyond this document. Engage an
experienced negotiator (seldom a regular practicing Attorney). Use him and
good books for advice if you are doing it yourself. As in all subjects,
the more you know, the less likely the experts will bamboozle you.
Another person of whom you should always be suspicious is the buyer's
ENGINEER. Never let the buyer bring his Engineer to the early meetings to
discuss your invention. An invention is more than the patent or the
finished product, and his engineer is there to probe into the inner
workings, concept, and production of the invention, things you would best
not reveal early. Also, it is a bad habit of all engineers to belittle
outside invention, under value it, try to work around the protection, and
generally advise his employer that he can produce an improved, more modern
design for less cost. He cannot of course, but this will always devalue
your idea in the buyers mind. All too often, the engineer's self-serving
views do kill the deal. If the buyer himself is an engineer you are stuck,
but if he is also a business man, he will have suppressed most of the baser
instincts of the design engineer side of his psyche.
Worse yet, it is not uncommon that the buyer may already be attempting to
develop a similar product, and is spying and not negotiating in good faith.
It is a sure tip off if the "buyer" brings along an Engineer or technician
who is not a top manager, and especially if he brings more than one. If
any is a design or product engineer, you should assume it is a scam. If
scamming is on the "buyer's" mind, he NEVER will leave him/them behind.
Since the meeting may already be scheduled, have an associate, employee,
your wife, or friend remove the engineers by taking them to lunch and the
Museum of History and Industry. Get them out of the meetings.!!!!!!!!
Bringing along an attorney or observer to a first or second meeting is also
a sure tip that something is up. If it is not obvious, always ask each
person attending what is their postion in the company, their specialty,
education, and why they are present. This is no time for remaining in
polite ignorance. If things are OK, the "buyer" should not feel
offended. If anyone is taking notes, be sure that you also take more
notes. I have had "buyers" come back with opinions that simply were not
per facts and claim that it was in their notes. Openly tapeing the
meeting is a good truth-serum. Fewer lies are said.
^ ^
^----- harken to the voice of experience -----^
it has happened to me!
(also, I am an engineer and know the pressures of employment on an
engineer) (I have been on all three sides of these issues)
A confidential-information secrecy agreement is valuable only to the extent
that you can or will enforce it. Revealing information is dangerous to you
only to the extent that the recipient uses or spreads it. Information
revealed with or without an agreement is of value to the other guy only if
he has the means to exploit it. Financial and other service people,
including product developers and engineers, seldom have the appropriate
organization to use your idea, and their ethics usually include client
confidentiality. Similarly, marketers (sales organizations, etc) lack the
means to produce, and manufacturers lack the means to market. Take care
dealing with those can both produce and market. However, in a sale or
license of your idea, these are most likely to be interested in acquiring
your invention.
One more caution: Financial people do not like to sign confidential
agreements. They consider them an insult and will insist that their ethics
will suffice, but more importantly, they are afraid that it might preclude
them from working with someone else with a similar idea in the future.
Ask, but don't insist. Insistence on having them sign an agreement will
likely shut off discussion and the money. Occasionally, they will have a
generalized agreement of their own, it may be weak protection but is at
least acceptable to them and not an insult.
Lastly:
--- ANTICIPATE LOSING CONTROL OF YOUR INVENTION AND/OR BUSINESS --
The golden rule, ie he who has the gold rules, is alive and well.
Eventually, the business will outgrow your managerial skill. You
probably will not have time to hone skill and run the company at the same
time. Also, in your heart, you may prefer being a technocrat. Either
you will discover this and step aside or you will be pushed aside, which
usually means OUT. Set up your golden parachutes early on.
Incidentally, most venture capitalist know this and are comforted
if they know that you know it also. Most investors, financial, or
managerial partners do not intend to cheat the inventor or founder of
the business, but if a fight breaks out, the inventor or founder almost
always loses and most likely feel cheated, and indeed may be.
Negotiating a graceful exit route up front is likely to be most
profitable. The best world is often the privilege of being able to
continue on the inside in an R&D or some other non-operating position.
Next best, is to leave quietly, leaving those in charge on friendly
terms. They are more likely to consider your interest if you are
still a friend, will invite you to the company picnic and even may
occasionally seek your advice or let you consult.
--- good luck ---
--- end ---
I recommend that you consider ---
If you retain an attorney, suggest these to him for his
opinion and/or inclusion.
Joint Inventors' agreement:
A joint application and the ensuing patent is a
personal property (35USC 261) in joint tenancy
(35USC 262) which carries a number of risks common
to joint tenancy. An agreement defines the relationships
of the inventors relating to the application, the ensuing
patent, and possibly the business exploiting the
invention.
Consider a buy/sell agreement in the unhappy event
that of a death of one inventor or a disagreement,
or simply one inventor wishes to retire from the
enterprise.
Assignment:
Assignment is a sale. You will no longer
own the patent. There is no joint tenancy remaining.
This is not necessarily bad, and is
usually done when the exploitation is to be through a
corporation. Common ownership is through the
privileges accorded to the stockholders.
Consider including in Assignment agreement -
A. A means to repossess if the company fails
to use the patent.
B. Reversion to the inventors if the company
is dissolved, except as part of an asset
sale, which is technically not a sale of the
company, but is effectively equivalent.
C. Assignee is responsible to Maintenance
and Defense. These are
bottomless pits. Make sure the assignee
is TOTALLY responsible and you are
COMPLETELY free from responsibility.
D. Never ever-never!!! ! base your royalty
payment on "profit".
There never will be any.
"Profit" may be defined as an accounting
device to square accounts with the Tax Man
(or to base royalties upon). There are too
many ways for a very conventionally
profitable company to load "expenses" to
have no taxable profit
(and not pay royalties).
Licensing:
You retain ownership, which solves the repossession and
reversion problems. However, certain responsibilities
remain on you, in particular, Maintenance and Defense.
Make sure that the licensees are required to pick up most
or all the costs, which are essentially open ended.
Especially if your licensee can force you to defend the
patent. You might be in court defending a patent for
which you are receiving only a modest royalty.
A license can be exclusive or non-exclusive. Particularly
with exclusive licensing, it is important to have a defined
recision process for the exclusive license. It may simply
be made non-exclusive, but in any case, it the exclusive
licensee fails to perform, he should lose the grip he has on
your patent. One simple way to ensure this is to tie it to a
minimum annual royalty or other payment schedule.
Incorporation:
Working your business (and patent) under a Corporate
organization sets limits and walls around your business.
Only the stockholders through the appointed officers have
responsibility for the business. All others may be used
as advisors, employees, contractors, etc. but do not have
decision responsibility and can be recognized or ignored
at will.
In general, Stockholders vote on a share basis as defined
in the Articles of Incorporation or State Law. Shares
not assigned to a stockholder are usually not voted.
There is merit to assigning only a portion of the stock
to the original investors. The remainder may be issued
for any purpose as needed. Usually this is for either
money to go into the Treasury or for new partners who are
expected to contribute some needed talent.
If all the stock is assigned originally, new stockholders
have to be paid with stock returned to the company or the
State petitioned to permit issue of more. There may be
an income tax liability for stock returned re-sold. Get
good accounting advice if this is the case.
Consider this wrinkle - When a stockholder is married, his
wife, in community property states is a joint owner of his
stock, but in other states, there is an "ethical" ownership
in that she either contributed directly to its acquisition or
has to put up with the sacrifice of time and effort
substituting for money. If you need proof of the ethical or
actual obligation, consult a divorce lawyer. How would the
stock be treated in a divorce case in your state?
Therefore, it is in order for her to be able to independently
vote 1/2 of the family's stock whenever stock voting is
exercised. This concept can be put into either the
Articles of Incorporation or the Bylaws.
Negotiating:
A big subject. A very few tips here.
1. Almost always never have your lawyer negotiate for you.
Lawyers are not called "deal breakers" for no reason.
2. Always have your lawyer ready to guide you in intricacies
and have him review the tentative and final drafts.
3. Do not trust anything the other side's lawyer says. He
can and probably will lie to you about what any clause or
wording means.
4. Do not accept long strings of words which have similar
meaning. "Law Definitions" sometimes have opposite
meanings from common usage. They are not there because
the lawyers enjoy typing or showing off their enormous
vocabulary.
5. Use the concept that a contract is not being written for
the benefit of the original contractees, who are in
gentlemanly agreement, but for their successors who are
not participants in agreement.
6. Never agree to something that you do not understand.
7. Never agree to something that could go wrong
disastrously. Especially if it could create future
liability.
8. You must accept some risk. It is part of negotiation.
Tying up every possible scenario is interpreted as a lack
of good faith negotiation. (works both ways). Evaluate
the probability of the problem occurring and the probable
consequences. Losing something is bad enough, but
creating an unlimited liability is a disaster.
9. Question anything that seems to be hinging on some obscure
point. If you can, get the negotiator to say "Oh, we
would never do that, (so it is not a serious point)."
Then immediately scratch it out (the scratching-action is
important), saying "Good, then we agree, but what is being
written is being written for our successors. Remember, a
disaster on the way home this after noon could put
someone else in our places by tomorrow morning or at any
time." This is guaranteed to flummox the presenter of
the hook. If he still insists, walk away, you really do
not want to deal with him anyway as he cannot be trusted.
If he says he has to go for approval, remind him that it
is really an unnecessary clause and approval for its
removal should be forthcoming.
References:
35USC, the United States statutes on patents. A copy may
be in your public library. Can be purchased from the PTO in
paper or on CDROM, or down loaded from the PTO on their bulletin
board or Internet Web page.
Patent It Yourself, by David Pressman, Nolo Press, $50, has
sample contracts for joint inventor, assignment, licensing, and
other things. Most libraries have at least one edition on the
shelves. 5th Edition is August 1996. Pressman generally
recognizes the problems described above respective to joint
inventors and licensing, but is silent on the problems
illustrated in assignment situations.
Venture Capital Handbook, by David J. Gladstone, Reston
Publishing Co, Inc., 1983, (a Prentice Hall company).
Lots of information about dealing with negotiations, especially
with sources of capital.
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Email to author = bross@bross.seanet.com
Home page = http://www.seanet.com/~bross
invent.txt
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key words: disclosures documents provisional applications drawings drafting
figures patenting patented patents search searching searcher searches PTO
Office examination examiner patent trademark trademarks trademarking filing
practice MPEP 35USC 37CFR issue invention inventor invented inventing discover
discovery discovered discovering design designer designing designed infringe
infringment infringement infringing crazyinventor
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