VR patent strategies

Someone buy me this

This is part of a continuing series of posts on IP issues surrounding virtual reality and augmented technology. Other posts can be found here.

In the previous post we looked at the design patent potential of VR user interfaces. One of the reasons to obtain design patent protection on the look of a graphical user interface (GUI), as opposed to a utility patent on the actual underlying functioning of system, is that the former will encounter significantly less resistance at the patent office than the latter.

If a young, user-facing, start-up is looking to add some patents to their portfolio, then there is no faster or cheaper way to do so than through a design patent. Unlike utility patents, design patents do not suffer from the recent spate of patent invalidations issued by the US Supreme Court.
Where pure software companies might be stymied by the USPTO's reluctance to grant patents on computer implemented methods, Virtual Reality (VR) based companies have a easier path to patentability.  The reasons for this are varied as their are decent VR concepts floating around but reasons can be summed up in two points.

1. VR software is rooted in computer technology.

The USPTO has determined that one way for software to prove its non-abstract nature is to solve a problem that is rooted in computer technology.  Software for hedging market bets is not rooted in computer technology, nor does it solve a fundamentally issue raised by such. For finance software, the computer is the platform, not the point of the technology. Essentially, there exists a non-computer implemented way of achieving the same result (money!), therefore using a computer to perform the same task does not make the idea abstract.

Virtual Reality, by its definition, has no non-computer implemented analog. VR is fundamentally different from reality and is a completely computerized environment, Thus, any concept regarding VR, including the concepts tied to generating VR environments, are necessarily routed in computer technology.

2. Most VR Patents will be directed to some user experience improvement or implementation.

A key distinction made by the USPTO regarding the patentability of software is the determination of if the software improves the functioning of the technology or not. High frequency trading algorithms make money, but they do not make any improvements to the functioning of the underlying computer.

VR patents will likely be drawn to improving the way that users are immersed in the virtual environment, and hence improve the fundamental aspects of the technology.

As such, while software as a category of patentable subject matter is facing strong headwinds at he USPTO, patents directed to VR technologies should have an easier time achieving allowance.

J Garner
White Plains, NY

VR Hardware and UI/UX: The next big thing in design patents

Google Cardboard - High Tech that melts in the rain. 

The internet teems with articles giving you the "20 next big things in X" or "15 reasons why everyone should know about technology Q." However,  most of these lists are really slim native advertisements for companies hawking all manner of kit and not really instructive on what the next big thing is going to be in any industry.

Luckily, I am here to tell you what the next big thing is going to be in a particular industry. I had the opportunity to go to Maker Faire this past weekend and take in the sights and sounds of what a low pretense, high diversity Burning Man would look like it if was hosted in Queens and had easy subway access. Among the automated pancake makers and drone suppliers, I kept noticing that what really stood out was the prevalence of VR (Virtual Reality Gear). VR gear was everywhere, not only in demo booths, but also strapped to the slack jawed faces of noobs and experts alike, usually through some jury-rigged cardboard contraption (as shown above).

VR Gear itself is a ripe for intellectual property protection. Usable VR gear presents a number of engineering and UX / UI problems that, when solved are like patentable inventions. Furthermore, just as in the Smartphone Wars (TM), the industrial design of one product versus another might spell the difference between a record shattering Iphone and an also ran Nokia. As such comapnies are going to be aggressive in patenting designs for hardware. Companies like Oculus Rift (Facebook acquired) already have pending an issued design patents cover the form of their VR headsets, and their products have not reached consumers yet.  

Occulus Rift Issued Design Patent on VR Gear. 

However, hardware is, well...hard, and designs for VR Gear are likely to be refined within the walls of engineering and design studios with massive budgets and expansive teams.  Neither of these resources are going to be available to the nimble, cash strapped, start-up.

On the other-hand, VR GUIs, i.e. the graphical display of information within the VR helmet, is the same sort of disruptive opportunity that garage tinkers, and lean teams have made fortunes on. Much like the design patents Apple Inc. received on its icon arrangement for the Iphone, VR companies will be looking to find the optimized, and proprietary, ways to display information to a user.

If one were asking me the "next big thing" is design patent law - I would say it is the race to develop and patent the most beautiful and intuitive VR UI this side of The Lawn Mower Man. In this race, the field is wide open.


  

The importance of underscore: Learning Flask and Python Windows Installs

Along with the broad, and highly compelling legal analysis provided with this blog, I want to also use this space to provide some insights into software coding.

In developing a legalTech App for Baselex , I decided to use the Flask micro framework. I chose this over Django principally because Django seamed a bit overkill for the simple back-end I wanted, and I wanted to get some hands on experience writing Python based server code without 10 hours of just reading documents first.

I found an excellent Tutorial for Flask here (the official one leaves a bit to be desired). Working on a Windows machine, you are always at a disadvantage since most developers are running OSX or Linux machines and have a more knowledge of the command line, and most tutorials assume that windows users do too. (FYI, you want to develop seriously, then know the command line - it makes you a ninja, use powershell)

After about an hour of setting up, googling, re-setting, and re-googling. I finally had Python installed on my system, along with pip and virtualenv. Setting up Python on Windows is not an uncomplicated process. While doing so, I learned the following

Windows Python users Pro-Tip taken from the excellent "Learn Python the Hard Way" 

1. Configure the path correctly. Make sure you enter [Environment]::SetEnvironmentVariable("Path", "$env:Path;C:\Python27", "User") inPowerShell to configure it correctly. You also have to either restart PowerShell or your whole computer to get it to really be fixed.
2. I would add to this [Environment]::SetEnvironmentVariable("Path", "$env:Path;C:\Python27\Scripts", "User")

When I finally installed Python, I followed the Flask tutorial instructions for a simple test app that would start a local development server. I made my folder structure, and executed my virtualenv script and......

 this happened:

Traceback (most recent call last): File "run.py", line 2, in from app import app ImportError: No module named app

I was crestfallen. All that work and I immediately get an error that prevented even the simplest of things from working. I tried everything, I looked at the code again, and copied it exactly. I restarted power-shell, and went to the help forums where others were having similar, but not exactly the same problem. I will spare you the amount of time spent trying to figure out the solution, but here it is.

One of the files I created was an  __init__.py file that contained the app assignment. Something was wrong here. I looked and looked and looked. The only thing I could find was that I had named my file _init_.py and not __init__.py (double underscores vs. single).

With trepidation, I changed the file name and Bango! my server started, and I was off to the races.

The lesson here about coding is that, as is law, precision counts. It is not enough to have the same code, but the name of the file has to be exact or else the whole atomic clockwork of computing can't tick over.

To NDA or Not to NDA, this isn't really a question...

There is a stain of thought, one prevalent in the venture capital community and elsewhere, that NDAs some how mark you as a novice, neophyte, or worse, a rube.

This line of thinking starts from the moderately dubious premise that VCs are all honest money, and they are too busy being efficient stewards of capital flow to even contemplate, let alone effectuate, the misappropriation of the finer points of your next big thing(TM). Secondly, the argument flows, if investors signed NDAs, what is to stop jilted Founders from suing them every-time the failed to back their company over a competitor. "Law suits are expensive, and we just don't want to risk exposure for an unlikely event."

I tend to find this reasoning akin to a hotel telling its customers that they don't provide locks to the room doors. The reasoning would be "Locking your door is, in essence, an insult to the ethics of our employees, and it passes a cost in terms of "locks" onto hotel, which is impermissible." Agreeing to this is totally reasonable, right? The odds that someone is going to break into your hotel room are statistically slim, so why worry about locking that door, or even have locks to begin with?  A hotel break-in is a low probability, high impact event. One that has an absurdly low risk control component. The cost of locking your door is low to you, given the potential down side of not locking it.  The cost of the Hotel providing locks to all its doors is high given how often people break into rooms.  

Therein lies the rub. Whose job is it to manage risk. The customer, or the seller.

The truth is that VCs see hundreds of companies, lots of time these companies are direct competitors to your company.  No amount of NDA language is going to give you complete comfort that some portion of your next big thing isn't going to get passed around like a handle of fireball at a Tennessee wedding.

However, that doesn't mean that you shouldn't make sure that you protect as much as you can. Big capital players usually have some form of internal control to at least minimize law suits, so it is not the end of the world if they don't sign, remember execution is much more important than  conception.  But ask questions, be knowledgeable about how they safeguard confidential information. If there are no locks, are there burly security guys on every floor?

However, if you are dealing with small angel investors and syndicates (potentially first time investors) that might a) not have the institutional controls, and b) internal discipline to keep things confidential, then make sure that you are using some form of NDA. Some of the smaller players might not have the systems in place to protect information, so a NDA can focus the mind. If you are dealing with anyone less than a household name in the industry, there is no harm in the ask. 

Asking for NDAs goes beyond investors. If you are outsourcing any part of your Dev team, NDAs are a good way to get people on the same page, as well as giving you legal recourse for straight up IP theft. (This does happen, regardless of what people tell you.)

All things being equal, even if no one agrees to sign an nda, you can still protect yourself.  We advise filing low cost provisional patent applications that cover your pitch deck. That way, even if your disclosures become public knowledge, you still have the potential of protecting the IP through the patent office. 

Never forget that VC money is not doing you a favor. Their job is to allocate capital, maximize return, and minimize risk. It is not your job to make their job easier by not protecting your intellectual capital.

Jordan Garner. 

Some thoughts on legal technology business models

The start of the New Year is a great time to revisit the basic premises that underpin business models.  For CodexJuris generally, that business model is legal software technology.

In the last year we have launched Baselex (www.baselex.com) a forum for lawyers to share difficult to find legal tidbits, the kind that frustrates easy googling and makes attorneys inefficient.

In the future, 2015 and beyond, we hope to launch other projects that tackle some of the inefficiencies in the practice of law.

However, the goal of reduced inefficiency is not always the primary goal of Legal Tech start-ups. Broadly categorizing, legal tech falls into two, non-mutually exclusive, camps. The first are outfits that that seek to replace expensive lawyers, usually with some combination of cheaper lawyer stables and intelligent work-flow systems. The second, are outfits that seek to replace inexpensive lawyers and staff with technology. Usually though software  designed to make expensive lawyers more efficient. Think of the first one as a market place for auditioning solo lawyers (like Angie's List, but for legal work) and second as modular document generation (the Baselex document repository). Of the two, I would place my bets (and I have) on the latter being more successful than the former.

Why? Well, the root of most things, money and risk. Lets take a hypothetical, suppose that Mega Company, and more particular, the in-house counsel of Mega Company, decided to outsource some bit of complicated legal analysis to a outside legal vendor. Vendor 1 is a start-up that claims they can supply the work product of a high-priced legal team by putting the client in touch with a low-cost legal team that has been pre-vetted.

Vendor 2 is a high priced law firm that has a sterling reputation for quality work and exorbitant fees. However, Vendor 2 is willing to cut the Company a deal, 60% of its normal fee, to do the project. 60% is a steep discount, but the Firm likely knows what it needs to make on its billable to be profitable and will use some Lawyer-Augmentation software to squeeze every last ounce of efficiency from the high-priced attorney (some poor associate). This can be done using optimized work-flows, semi-intelligent work product generation, and in case of software failure, a heavy wooden stick.

99 times out of 100, In-house counsel is going to go with Vendor 2. Why? Risk. Who assumes it and for what cost. In example 1, the in-house counsel assumes the risk for catastrophic screw-ups. If the work produced by the start-up was excellent, then everyone is happy that the Chief Counsel used such an innovative product.

However, if things go pear-shaped, and they do, who will receive the highest risk exposure? The start-up...nope. They aren't in the business of providing legal services, they are a match maker who takes a cut. The low cost contractors that the start-up sourced? Nope. They have an agreement, and mal-practice insurance (they do have mal-prac insurance right...).  Nope, the full weight of failure will fall on In house counsel. In the event of a catastrophe, it will be the chief counsel, or more likely an assistant counsel, whose squirming terror stricken body will be dumped before the Corporate Board to explain why it was a good idea to cut costs on a highly sensitive issue.

Going to the other extreme, if a well established, well regarded firm screws up, and it happens all the time, the GC can point to a number of factors to deflect blame. Specifically, going with a known quality service provider is a means of providing institutional cover to the decisions of a procurement officer. The GC can point to the prestige, the billing rate, the marble lobby and say "it was reasonable to assume these people knew how to do their job, not my fault." In this scenario, the GC is not paying for the expensive attorney out of his own pocket, and definitely not staking her personal livelihood on an unknown entity.

You can see this dynamic work out in today's legal tech market. Document production and review companies primarily serve law firms, not the end client. Some do, but the business model is to have the cost savings of using less expensive attorney go to the client and not the Doc review Company. The Doc review companies replace the low level attorney salary, and unload some of the risk. What they don't do, is replace the Law Firm.

If that weren't true, you would see document production companies turning into litigation powerhouses, instead of the rise of non-associate litigation / discovery analyst positions inside litigation powerhouses.

As such, a winning business model is supplying the existing legal industry with more sophisticated tech. Trying to supplant firms with Legal Tech is difficult, primarily since the only way to do that would be to provide an equivalent level of risk cover to the GCs. Moving fast and breaking things is a great way to dislodge entrenched tech outfits, but it is a great way to not get risk adverse GCs to become customers.

How do I pick a Law School? Disbarment Metric Analysis?

This equation has nothing to do with this post

How do I pick a law school? 

The methods to select a law school are as nearly varied as the reasons for attending one.  Clinic options, professorial notoriety, attractiveness and marriageability of the student body, starting salary, prestige, parental edict, etc., the list goes on. 

However, one metric that I don't hear all that often is "likelihood of disbarment."  Sure, it is not as fun to contemplate the odds that your highly expensive investment in upper-middle class lifestyle preparation will be snatched away due to some fiduciary or ethical indiscretion, but some thought should be given to the possibility. 

Recently, NYS opened up the attorney registration database for programmatic access (meaning you can download and manipulate the fields as a Excel, JSON, CSV and other format types, as well as access the data directly from a web app). Nominally, this will allow you to check your reg status without having to go to your department website, but I digress. 

Of course, the first thing I did was manipulate the data to find out how many attorneys were disbarred who were admitted to the NY State Bar. According to the list, about 1800 people have been disbarred out of 350,000 records going back to 1899. 

The next thing I did was try to chart the data via school. What I got was hundreds of records, some for schools I had never heard of (Northumbria - I am looking at you).

The next problem was that people arbitrarily decided how to write their school (NYU vs N.Y.U vs New York University School of Law).

To solve that, I ran some regex fixes to condition the edge cases I could see. I tried to format the data by stripping out "Law", but when you try to strip out "School" - weird things happen. So there are some duplicate entries (like Brooklyn and Brooklyn School (i.e. stripped out 'Law').  Once I got a super-set, I manually conditioned the data to a top 20 set. Here are the results. 

Yea Alma Mater! 

Now, on its face, Brooklyn is the highest, but I would provide some caveats. The records go back to 1899, and the first Brooklyn Law reference I can find is in 1918. That means that it is possible that the 160_+ disbarment for BLS grads could be amortized over the course of nearly 100 years, the same goes for NYL. However, I am not sure what happens when you are disbarred and then deceased. 

***The data documentation does not give info about current status vs historical stats.  I would suggest that the Brooklyn number represents those persons that are still alive, but I have no way of knowing.***

However, when you restrict the entries to people who were admitted in 2000 or later, you get a different chart.

So what accounts for the difference? 

I mean we could just default to "Touro et al are lower ranked schools, of course their alums get into more problems", but that seams like the intelligent design answer to this science questions.  Maybe the fact that top law school grads in NY go into politics, business and large firms where there is a less chance that they will get into trouble? More lower ranked grads go solo (by choice or by default) and solos always have a higher chance of getting into trouble? 

Who knows. Any Theories, drop them in the comments. 

 t

[Scam] United States Trademark Registration Office

The United States Trademark Registration Office is a scam and you should not give them any money.

"Woah!", you might be thinking. That is a bit of a harsh take on the beloved United States Patent and Trademark Office. What happened, they wouldn't let you register that mark for "Baconnomics" (Ed: Yes, that is true).

However, what I am talking about is NOT the USPTO, but a scam organization that uses phonetic similarity to try to trick you into giving them money. Unlike the actual United States Patent and Trademark Office, the United States Trademark Registration office is a non-government entity, that seams to exist in a P.O. Box in the low rent side of Los Angeles.

Here is a copy of the scam form letter (source: USPTO).

DO NOT GIVE THEM MONEY.

You will be angry. Your IP Attorney will be angry. Sometimes clients openly question why they need to use an IP professional.

Note that the document above (in section 39 USC 3001) explicitly states that it is not a bill from the USPTO, but a solicitation. Clever scammers don't want to get sued or imprisoned, but they do want you money.

Spotting, and protecting you from IP Scams is one of our jobs, one we take seriously. If you ever receive patent or trademark notices from an office not in Virginia, or D.C. proper, have someone check it out, or at least look on this website or on Baselex.com.

Jordan Garner

Access Requirements for USPTO Alexandria, VA Campus

If you are planning on visiting the USPTO offices in VA, and you have a NY License (or one of the other 7 listed below), you are going to need to bring the alternative IDs listed here. 

As of April 21, the following states do not meet the REAL ID standards:

·         Alaska

·         American Samoa

·         Arizona

·         Kentucky

·         Louisiana

·         Maine

·         Massachusetts

·         Minnesota

·         Montana

·         New York

·         Oklahoma

·         Washington

Visitors to the USPTO with state issued identification from these states must present alternate forms of identification to facilitate access. Three of the states listed above offer an Enhanced Driver’s License that is identifiable by an American flag on the license; they are New York, Minnesota, and Washington. USPTO will accept the Enhanced Driver’s Licenses from those states.
DHS currently accepts other forms of Federal-issued identification in lieu of a state-issued driver’s license, such as a:

·         Passport

·         Passport card

·         DoD’s CAC

·         Federal agency HSPD-12 ID

·         Veterans ID

·         Military dependents ID

·         Trusted Traveler card – Global Entry, SENTRI, or NEXUS

·         Transportation Workers Identification Credential (TWIC)

For visitors using state-issued ID to access the USPTO, only driver’s licenses or identification cards from states that meet Federal standards will be honored. USPTO will continue to accept other forms of government-issued identification, including Federal employee badges, passports, military identification cards, or Enhanced Driver's Licenses as noted above.
If visitors do not have acceptable identity documents, the person to be visited at USPTO will need to provide an escort in order for the visitor to access the USPTO. The visitor must be escorted at all times while in USPTO secured areas.

For additional information about the REAL ID Act, please visit www.dhs.gov/secure-drivers-licenses.

Don't use Invention Assistance Companies until you check the PTO

Short Post: 

There are a lot of entities out there that want to help you get your idea off the ground. From venture capital firms, to Kickstarter, to your cousin's Persian rug connection, there are people well placed who want to see your idea succeed and share in the profits.  
There is nothing wrong with bringing a few fellow travelers along with you for the ride. In fact it is good practice to have a couple more heads to put together when the going gets tough. 

One group that does not have your best interest at heart are "Invention Assistance" companies.  You seen the ads on late night T.V. They will help you patent, market, and sell you idea to major companies! 


Why go to a moldy patent attorney who has ethical obligations?  Hitch your wagon to a business that knows what good ideas look like, and will escort you through the process from conception to showers of riches.  </sarcasm>

While it is entirely possible that these companies do help the odd inventor. It is much more likely you will exit the process will poorer, both in terms of actual money and patent rights. 

We could walk through all the way that Invention assistance companies upbraid your future patent having happiness, but the Patent Office has already compiled a list of complaints as depressing as they are informative.   

Here is an excerpt of a complaint sent to the PTO regarding an Invention Assistance Company: 

Name of mass media invention promoter advertised in:  Mail Advertisement

Invention promotion service offered to be performed:  To market and license my invention.

Explanation of complaint between customer and invention promoter: 
I am filing a complaint against this company.  I paid them $25,270.00 completed last payment May 2011.  On November 6, 2012, received a letter they closed their business so I got ripped off.  In year 2007, I lost $5527 – to another companyXXXX., XXXX, XXXX, XX 07004.  That makes it (two) almost $31,000.  How can I trust anyone to market and license my invention.  I don’t’ have the money anymore. I research on the website on the XXXX before paying any money.  Who are the trusted companies who will follow through and assist new inventors?  These companies had a bad reputation with the BBB and FTC.  What am I doing wrong?  What do I look out for?  I need help to get my money back and market my invention.

You can read all the complaints for various Invention assistance Firms, here. 

Patent Lawyers, and law firms in general, will not assist you in taking your idea to market. That is generally a task best left for yourself.  However, if you must use a company to help you, understand what you are getting yourself into. 

More importantly, check the company out, and due your due diligence. It is not enough to review the BBB, but check the PTO, and the FTC. If your idea is worth thousands of dollars, then it is worth the time to make sure you are protecting it right. 

Jordan Garner 

What should be in my site's Privacy Policy?

A client recently contacted me in a panic. They had seen the recent FTC settlement (see here) with Snapchat and were concerned about their own App's privacy policy. We talked through their concerns and determined that their privacy policy was sufficient to cover current usage of their App.

It is important for a Start-up developer to know the purpose of a "Privacy Policy" and its cousin "The Terms of Use."  They are not simply "make work" hassles for lawyers, or something to be copied blindly off of a Git repository. {Ed. Except if it is a Privacy Policy template from www.Baselex.com}.

The purpose of both can be summarized as the contractual obligations of each side, the user and the App provider, that exists when the App is used. {Ed. For our purposes, App covers any minimally interactive website.}

Terms of Use
The Terms of Use are fairly straight forward and mostly deal with the User obligations. In an effective ToU, the App Provider lays out some explanation of the functionality that will be encountered in using the App (such as forums or comments) and a code of conduct that the users agree to be held to when using the App. For example, many apps have a "non-harassment" component to their Terms of Use. Users that violate this, generally find themselves on the wrong side of the "Ban Hammer".  The Terms of Use are similar to an End-User License agreement, and tend to contain similar language. ToS, when effective, provide a User of an App with a clear list behaviors, rights, and obligations (such as honoring Intellectual property) that exist when they use the App.  

Privacy Policy
Privacy Policies differ in significant way from Terms of Use and generally lay out how the App Provider will use the data of the User. The goal of any effective Privacy Policy is to highlight the ways that a User's personal identification and data might  be used by the App Provider. Aggregated stats, geolocation, and preferences for Ad-Targeting are all pieces of data that an App Provider might collect about individual or collective users. There is no explicit rule in the U.S. that limits the data that an App provider can collect to specific categories. (with the exception of various HIPPA relevant issues which are beyond the scope of this brief post.)

What is required is that the App Provider lay what those pieces of information that are being collected. A well drafted Privacy Policy provides enough scope to the App Provider to modify their data collection practices based on market need, while not deceiving or misleading Users as to the scope and extent of the data collected.

Where SnapChat ran afoul of the FTC was in failing to abide by this primary role. The Snapchat Privacy Policy (according to the FTC) provided explicit statements on what data was and what was not collected through the use of the App. Specifically, Snapchat claimed that the communications sent to recipients was ephemeral to the recipient and not stored in any database or server.  Through a series of hacker data breeches, it became clear that not only was this not true (there were vast databases of Snaps retained by Snapchat) but the data was not ephemeral to the recipient. The recipient of a Snap could, through various technological methods, obtain a permanent copy of the snap.

 Furthermore,  the Snapchat privacy policy explicitly disclaimed the storing of geolocation data. Again, after a review of the data stored by Snapchat, it became clear that geolocation data was being stored for future use.

As a result of these revelations, it became clear that the Privacy Policy and Terms of Use for SnapChat's app was woefully deficient and confusing. The natural outcome when consumers feel deceived and confused about the true nature of a product is an investigation by the FTC.

Therefore the first thing to ask when crafting a privacy policy is what does your app or website seek to accomplish, and how does it use the user data in order to accomplish task?  There is no benefit in making a statement about specific functionality and features if these features are not present. Quite the contrary, there is a significant downside to telling App users one story about functionality, while the truth tells another. Likewise, if you need geolocation data, or contact lists, explicitly state that you need them and use them in your privacy policy. It is better to lose a few privacy adherents in the early use stage then have potentially millions of potential plaintiffs in a class action suit based on deception.

As final matter, Privacy Policies should not be drafted and locked in a drawer under the TOS/PP file folder in your server root.  Every iteration of the App, from customer feedback, to posts, to direct messaging might change what type of data you need to collect from your users. Similarly, if you are changing revenue models, you might need to update your privacy policy to indicate the structural change in how you are using the data (from purely analytic, to a data broker model). A quaterly review of both the ToS and PP are a good way to ensure that you are not providing inadvertently misleading information to your Users about the App and their privacy.

Jordan Garner

Start-UP Failure and IP

Quick post:

I have been filling my free reading time with stories about how different start-ups fail. My inquiry is not limited to "Tech" or "Software", but to restaurants, shipping companies, mines and other small and medium businesses that found themselves suddenly with more liability than assets.

Obviously, I am not a business manager, so my opinions should be taken with a healthy grain of salt. However, a reoccurring theme appears to be that companies often fail because the business plan that failed to accurately match reality.  It should be noted that reality is a hard thing, it changes and morphs over time. Having a business model that consistently matches it is very difficult.  There are very few conceptual frameworks for making money that have not be changed by the advent of new er better technology and information, (agriculture? Prostitution?), trying to keep pace is difficult.

That being said, what I have also noticed is that very few (say less than 1%) of the companies I read about failed because of IP infringement. Sure, there are some tech start-ups that fail because they step on the toes of a competitors IP (esp in the trademark and copyright space), but it is generally not how start-ups fail.

However, there is a pernicious perception in some quarters of the start-up world is that accusations of infringement are a) rampant and b) driving companies who would otherwise be profitable, off of a cliff.

The reality, much like business plans, must have some facts and analysis to support those conclusions. A significant quantity of IP suits filed in 2014 were directed against large profitable business and instigated on the behalf of non-practicing entities.  It is rare for any company to receive a cease and desist letter from a patent holder. It is rarer still for them for the target of a suit to be a un-profitable start-up.

For the curious, here are some post mortums of various tech start-ups:

http://www.cbinsights.com/blog/startup-failure-post-mortem


http://successfulsoftware.net/2010/05/27/learning-lessons-from-13-failed-software-products/

The point is that businesses have a lot of things to worry about, and a limited amount of time to worry about them. Worry less about IP infringement, and more about your business model and odds are you will have made the right choice in your focus.

A Modest Proposal: Bitcoin + Kickstarter +PMCs = Brave New World

I am looking for my razor....

Unless you have been living in a cave, or actually fighting the Shining Path in the jungles of northern Peru, you are aware that Boko Haram, an Islamic fundamentalist organization, has kidnapped more than 200 schoolgirls. Their stated purposes was to sell them into sexual slavery, their unstated purpose was to sow general mayhem.  If you want to read more, then feel free to check out excellent coverage here.

The Nigerian government has offered the equivalent of $300,000 for information leading to the whereabouts of the missing school girls. In an age where random kickstarters for pointless, useless crap raise millions of dollars, the international community (not governments, but actual "global" citizens - i.e. you) can probably do better than a bit over 1000 per kidnapped schoolgirl.

This brings us to the intersection of a number of internet technologies and recent global developments. Currently, there is no technological barrier to use a Bitcoin based crowd funding site to hire a private military contractor (UN speak for "Mercenaries") to locate and rescue the girls. There would be obvious implications for territorial sovereignty for the Nigerian Government, but they appear to already have a problem with territorial sovereignty.

How would this work in practice? Poorly. However, it is the logical outgrowth of technologies currently available.

The way bit coin works is to render anonymous the commercial transactions using a finite (but infinitely divisible) resource stock . Libertarians and others find this particularly beneficial because it removes the threat of "fiat" currency fluctuations (of course it introduces other types of currency fluctuations, but that is not the point here ) and allows for transactions to occur outside government control and inspection. This
combined with a crowd-sourcing model would let denizens of the world contribute to a fund anonymously.  Millions of dollars worth of Bitcoins could be electronically transferred to a holding entity that was the point of contact.  This aggregation of resources could use a crowdfunding model, one well developed over the past few years, to solicit and explain the purpose of the holding entity.

During the United States' decade and a half worth of combat in the Middle East, PMCs have increasingly been used to guard kep individuals, do recon, and even engage in combat. (The nightmare that was Fallujah started because some PMCs went looking to settle a score with insurgents).  Now, they comprise an international shadow military active in almost every conceivable military role. They have their own equipment, weapons, command structures and PR teams.

In our scenario, once the funds were amassed, they would be used to hire a PMC outfit to retrieve the girls.

People might cheer or wring their hands, but no one should assume that this in not possible today. These three technologies combined form a platform.  Lets call it an "Anonymous Crowd-Sourced Conflict Management" or ACSCM platform (and API!).  Once it is successfully deployed, there would be no reason to think that other enterprising individuals wouldn't use the platform for more nefarious ends. One could envision Dark Nets full of Terrorist Groups pleading and copying other groups request for crowd sourcing (which raises a interesting question out IP theft among various terrorist groups) to fund their particular plots.

We are constantly told how new technologies will change the world. The problem is that we always default to that change being only beneficial. All technologies have the capacity to use and misuse in ways their original creators never intended.

IPT Patents is a Patent Scam Company [Scam Alert]

In keeping with a general theme on this blog, we have uncovered another International Patent Scam service.

IPT (www.ipt-patents.com) is sending out letters, a copy if which is reproduced below, that claims that they are a "Registration of International Patents" Office.

My second rule of Scam-club (the first is that you always talk about Scammers) is that you never trust any documents coming from a P.O. Box in  eastern Europe.  For that matter, I wouldn't send money to P.O. Box in Jersey based on an unsolicited letter.

Don't fall for these scams. If you want to file for a patent in a number of countries, you will always save more money by hiring an IP attorney to help walk you the mine-field.  Otherwise, you are easy pickings for the IPT's of the world.

Add them to the list:
IPT
UPTS
IP-Data.biz


http://www.wipo.int/export/sites/www/pct/en/warning/ipt.pdf

[SCAM Alert] WDTP

Spring time is the time for flowers, and Patent Office Scams.  A client just alerted me to a new IP Scam outfit called WDTP.

Again, a good rule of thumb is to avoid any and all official mailings coming from a P.O. box in Brno, Czech Republic.

 Brno looks like a lovely place to hang out, get some Eastern European beer and take in the sights. It is not a great place to secure your international patent and trademark rights
Don't fall for these Brno based scam operations:

WDTP
UPTS.org
IP-DATA.biz

You will not have anything to show for it.

Jordan Garner
.
 

Let it snow! Burton Patents

To say that the winter of 2014 as been harsh would be an understatement. In the North-East and West, snow totals are approaching historic levels. Even as I type, another monster storm is gathering to dump feet of snow on an area stretching from upstate NY to Maine.

If there are any winners in intense snowy winter, it is ski resorts. Resorts, it is obvious to state, can't function without skiers and snowboarders.  One of the premier outfits in snowboarding Burton is, aside from a trendsetter in slope apparel and design, a prolific patentee.

According to the patent databases, Burton has more than 100 issued patents and pending application in the US.  An appreciable number of these patents are directed to function features, such as the spring leaf modified glide board design seen above.  Other patents address the continuous problem of lacing your boots. For example patent 8418381, describes a lacing system for boots.

One of the features that drives sales in the apparel / sporting goods space is the relentless need to innovate and produce new and improved models. In that respect, the Tech space and the sports retail space are not significantly different.   The ability to patent these advancements, however incremental, mean increased sales and wide recognition as an innovator.

Not every patenable idea is a commercial success, nor should it. A large purpose behind the patent system is to allow companies and individuals to iterate over known ideas to get new ideas. Sometime, the iteration is not worth the added expense. Sometimes the iteration was the last piece of some overall systems puzzle that advances the art, and becomes the basis of new paradigm in the industry.

Burton made a large push for the integrated boot binding combination. Had it taken off, it would have changed the technological direction of the industry. At the end of the day, in 2014 at least, that technology is a side show to the more simplistic boot binding system employed by Burton and other board manufacturers.

The point is that you never know which ideas might strike and catch fire, and which ideas whither on the vine. If you wait until you are successful to patent those ideas, it is already too late.


Jordan Garner

The Case for a Financial Engineering Art Unit at The PTO

If you understand the formula to the left, then congratulations, you are probably a financial engineer.

Financial engineering is a multidisciplinary approach to finance that uses mathematical modeling, computer algorithms, and economic principals to develop various sophisticated financial instruments. The goal, as with every alchemist, it is generate something of immense value from something of very little value.

Where the end product of financial engineering intersects with IP law is the notion of the "business method patent".  Most of the concern regarding Non-Practicing entities (Patent Trolls), are focused squarely on the validity of patents relating to financial engineering implementations.

 The U.S. Supreme Court has recently granted Cert. in CLS Bank v. Alice Corporation. The internet is full of blogs explaining the merits of each parties' position, and i have nothing useful to add to that conversation.

What I do add is this: The general disposition of people opposed to business method patents is that the concepts are abstract, and do not do anything new with old concepts. Unfortunately, that opinion confuses the prohibition on non-patentable subject matter (Sec. 101) and novelty (Sec 102).

If the argument is that a financial engineering concept, like the 3rd party escrow arrangement in ALS, were abstract, then why are we arguing about it? Clearly someone implemented the idea, hence making it tangible. Once something can be made tangible, it is no longer abstract.  Really, most positions on business method patents collapse into a novelty argument.

The patent office was issuing loads of patents on financial concepts tied to various computer implementations. When these patents are challenged, the argument is always that the patentee is merely applying the concept with a computer. The parties could point to the prior art, but they usually find it lacking. Thus, they settle into a long patent-eligible subject matter argument instead of a novelty, obvious argument.

The result is that Congress, the President and various industry groups are attempting to change the law to suit the goal of eliminating harmful business method patents.

A better way to solve the problem is to move the issue back into the patent office. It is my theory that one of the reasons that business method patents get through the patent office is that most of the Examiners in the art unit have a computer science background and not a financial engineering background. If the PTO actively recruited a financial engineering unit, and stationed them in a Manhattan Satellite Office, they would have the synergy of a examiner corp that is familiar with high-end financial concepts, and a store of knowledge as to what constitutes prior art.

Why Manhattan? Proximity  to Wall Street; home to several leading financial engineering graduate programs. Supply of former and current financial industry employees who can transition into the examiner role.

Before we close off an entire field of patentable subject matter, we should at least try to diligently examine them.

Jordan Garner

Getting Hired in the IP Field [PTO Stats]

There is nothing better then data...said no one...ever. However, I think lawyers should have a keen eye to trends, and trends only make sense with data.  The patent office is a great resource to uncover strategies and long term trends in the field (and in American innovation in general). Below are some patent stats for 2012.

It is interesting that slightly more than half of all the applications filed in the US, originated from inventors in foreign countries. The take away is that foreign filing in the US is a serious source of work and revenue for firms, large and small (there is a reason I go to Japan once a year). However, one could argue that Americans have lost the edge in their own patent office. When you break out the foreign countries into their own catagory, the situations becomes more interesting.

Japan, once the second largest economy in the world, is still the second largest filer of Applications in the US. In contrast, China (PRC), is the world's second largest economy, but is tied with Canada for the amount of applications filed in the U.S. Over time, these number will begin to reflect the rise of China on the global stage, but the concern that China is already at the front, is a bit misplaced.


Lastly, the estimated number of active patent practitioners is 26,000. So, when you calculate the total number of applications filed by the number of active practitioners, you get 20.8 Applications per practitioner. Seeing that some of these applications are pro se, some companies have hundreds of applications filed by a small team, the number of applications per attorney or agent is actually quite small. I will let you draw your own conclusions on what that means for the prospects for new lawyers.

[Ngram Viewer] Patent troll vs software patent vs open source

This is a brief follow up to the earlier post on not fearing/feeding patent trolls. I wanted to see the mention frequency for patent trolls measured against open source software and software patents. The chart is below and self explanatory. Social media tends to drive our opinions as the the current state of IP. However, the empirical evidence tells a differs story.

Clearly, the story of innovation is being driven by open-source technologies. While software patents exists, the percentage of mind share they occupy pales in comparison to open source.

Don't Fear the Patent Trolls

One of the concerns revised by start-ups is fear that their small company will be sued by a Patent Troll (Non-practicing entity). Generally this concern is premised that the software (it is almost always a software start-up which fears patent trolls ) used by the start-up is covered by some obscure software patent.

Much like the Satanic Moral Panic scares of the '80s and 90's, the fear of patent trolls outstrips the actual reality.

Generally, the goal of a NPE is to obtain a lump sum payment for past infringement. Suing a start-up which has not demonstrated any revenue, or even a viable business plan to generate revenue, wouldn't gain any meaningful recovery. In order to recover for patent infringement, you have to show lost profits, reasonable royalty or willfulness. Since NPE's (by definition) do not practice the patent, they have a hard time showing lost profits. Thus, they rely heavily on a reasonable royalty of the Companies' profits.

If your start-up has barely received a series A funding round, the profit motive for litigation is not there. That doesn't mean that a NPE won't send you a letter alleging infringement, thus trying to rattle the tree a bit in the hopes that you have deep pockets. However, if you are a start-up without a lot of revenue, or a famous or wealthy founder, odds are you are not going to find yourself in Court.

However, if you do receive a nasty gram from a lawyer claiming patent infringement, ask the sender to identify the patent and the particular claims alleged as infringed. Wait to hear back from them. If they get back to you in a manner that does not answer those two questions, then it is time to contact a professional IP attorney.

The point is that NPEs suing start-ups are not a wide spread issue. A quick google search shows about half a dozen high profile instances, but that is contrasted against the list of start-ups supported by every major venture firm out there.

Not every start-up is being sued into oblivion on the basis of specious patents. For instance, the Government Accountability Office found that Patent Troll Litigation only counted for 20% of patent litigation cases in the US. The rest were simply run of the mill patent disputes. Of that 20%, most NPEs directed their fire to major multi-national corporations, not 3 man start-ups.

Code, innovate, and create. Don't spend your time thinking that their are monsters under the bed.

Jordan Garner

Standard essential patents are...essential

Forbes has an interesting article on standard essential patents (SEPs). You can read it here. http://www.forbes.com/sites/hbsworkingknowledge/2014/01/16/a-way-to-mitigate-smartphone-patent-litigation/

The article often points to Qualcomm's 6 billion dollar /year in licensing royalties (for CDMA patents) as though it were an example is an in the breakdown of the SEP system. 

However, the article fails to note that CDMA is not an obscure technology foisted on an industry. CDMA is the one of the most widely used cell phone communication standards on the planet. 

The whole purpose of the SEP system is to provide a reasonable royalty to the inventor of technology that the market determines is the best way to implement a solution to an industry-wide issue. 

If the industry is unable to perform this function, as the article implies ( noting the increased politicization of the process ), then why entrust the process to industry?  Forbes appears to be making an argument that the market, as it relates to SEPs, has failed.

If un-elected industry officials can not pick technological winners and losers, why not ask the un-elected bureaucrats to do so? In that scenario, some collection of professors, lawyers and government appointees could hash out some solution which results in a standard, non-negotiable license applied across the board.

If that outcome feels less than appealing, then the basic premise that the system is failing needs to be reevaluated.

If your technology undergrids global communications, you should be compensated for it, regardless of if you build every piece of equipment or not. The fact that different factions would argue for their technology is not a break down in the system, it is the system functioning as it was intended.

Jordan Garner
(c) 2014 Moorsgate Media