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.