Dear Rich: Nolo’s Patent, Copyright & Trademark Blog

Dear Rich, I have a question. I have invented a very useful tool and have a patent pending. Also I have an arrangement with a nonprofit and some principals. The nonprofit will operate the business of selling the tool to generate revenue. The principals provide funding and agree to use their retail outlets for the sales. Can we license a manufacturer to manufacture only and license the nonprofit to sell the product? The short answer to your question is that we're not sure. Yes, I know that the Dear Rich Staff is packed with lawyers, but more information is needed. For example, we're concerned about maintaining your nonprofit tax benefits, and the value of your patent pending status, and we're not sure what you mean when you say you want to "license a manufacturer to manufacture only"? Do you mean versus manufacturing and selling? We're also not sure who controls the rights to the invention, you or the principals? In a situation like this -- when you're mixing investors, inventions, and 501(c) tax issues -- you're best off bringing an attorney to the table. 

Dear Rich: Can you patent an invention that was designed by invention software? How much human involvement is required to be considered to be invented by humans? Can an invention created by invention software be considered nonobvious under patent law? We wish we had the answers to these questions but fortunately we know someone who does. Attorney Robert Plotkin has written a book, The Genie in the Machine: How Computer-Automated Inventing Is Revolutionizing Law and Business and the Dear Rich Staff interviewed him as part of the Nolo podcast series. You can listen to Robert Plotkin's answers here.

Dear Rich: I developed a new sporting event and would like to find out how I can go about getting it patented or copyrighted? I have read about other types of inventions but not about the development of a new sport. The short answer to your question is that you may be able to patent your new sport but you will have a hard time claiming a copyright. Patents have been issued for new games, (ping-pong poker, anyone?) for variations on existing games (arena football anyone?), and even for competitive techniques within sports (ready to improve your putting?). (You can read more about these sorts of patents in this article.) Under a recent patent ruling a process or method (such as a sport with rules), may qualify for a patent if it affects some hardware -- that is, it is tied to a particular machine, object, or apparatus, or it transforms an object into a different state or thing. In short, as long as your 'invention' includes a physical element such as a football, hockey stick or some other object or hardware, you probably satisfy this requirement. As for copyright, you cannot copyright a system or method (although you can copyright expressions of that game -- for example, a Wii version of the sport, a book about it, or demonstration videos). Of course, the Dear Rich staff notes that your biggest challenge may not be getting the patent, it could be gathering the resources to stop others from playing it without paying you. 

Dear Rich: I am preparing to license a U.S. "patent pending" invention to a U.S.-based company. Even though the market for the product is clearly worldwide, it is sparse enough that it does not justify expensive foreign patent filing. The company's supplier and its competitors are located in China and Korea. If any of these other companies sell to U.S. customers via the internet (typical), I believe the sale legally occurs in a foreign country, therefore sidestepping my patent. If so, I question if the company I will deal with has any reason to enter a license agreement with me. Is there any way I can be protected in cost-permissible way? I'm so glad you asked. The short answer to your question is that once you acquire patent protection, you can stop Internet sales to U.S.-based customers. U.S. patent holders can stop anyone from importing infringing products or offering infringing products for sale (advertising or marketing) that product within the U.S. There are also  federal court decisions indicating a foreign supplier cannot "induce" infringement in the United States. So, whether copies of your product are sold on the Internet, or they slip out of the factory's back door, or result from competitor copying, you can stop these from coming into the U.S. The bigger concern is who will bankroll the policing and enforcement needed to stop this activity. One of the reasons inventors license (rather than manufacture themselves) is so that the licensee (the company to whom you're licensing) will watch your back. You may be able to enhance that protection by authorizing (via the licensing agreement) for the licensee to go after infringers and to split the resulting court awards after deducting legal expenses. (You can find additional information about licensing patents in this book.) Without going too far into the blah-blah-blah world of patents and lawyers, the Dear Rich staff feels you should discuss this matter with an IP attorney before agreeing on important licensing agreement terms such as territory, indemnity, and grant of rights.  (You can find qualified IP attorneys in your area in Nolo's Lawyer Directory.)

Dear Rich: I wonder if you can help. My great-grandfather patented several steel inventions back in the early 20th century in the U.S. How do I find these and what happened to them after he died in 1941? Do the next of kin have any rights to them? I'm so glad you asked. The short answers to your questions are: (1) you can find out more about the patents at the Google Patents site, (2) anything patented in the early 20th century is in the public domain now, and (3) there are no rights in public domain inventions. The Dear Rich staff recommends Google Patents instead of the U.S. Patent and Trademark Office searching site because Google is easier to use and more comprehensive. Try the Advanced Search feature to search by inventor name. Prior to 1995, U.S. patents had a duration of 17 years, after which the invention is free for anyone to use or manufacture. We wonder if your great-grandfather was one of those early 20th Century steel pioneers who gave us stainless steel, modern dry-blasting, or a revolutionary method of making rails. (Digression Dept.: Speaking of steel, the Dear Rich staff learned today that it takes 7 kg (15 lbs.) of steel to manufacture a bicycle and 816 kg (1800 lbs) to manufacture a car. No wonder H. G. Wells said, "When I see an adult on a bicycle, I do not despair for the future of the human race.")

Dear Rich: Last night I emailed a small company about an idea I had about a product I thought they should make. This morning I received an email from them thanking me for the suggestion. Then I realized that I should have patented the idea and tried to license it to them. Have I forfeited the right to patent it by disclosing it to them? If I file a provisional patent before they file either a provisional or nonprovisional patent on the product, do I maintain the rights to the product? I'm so glad you asked. The short answers to your questions are: (1) "No, you haven't forfeited the right to seek a patent, (although you have started the clock ticking)," and (2) "As long as you can prove you invented it and you meet other patent requirements, you retain the rights to your invention regardless of whether the company files a patent application." 

Dear Rich: A former co-worker developed a new business idea. I signed an NDA and we both worked on commercializing the idea and planned to form a startup. He lost interest. An attorney reviewed the now-expired NDA and said I was fine to pursue the idea on my own, that I was under no obligation by the NDA. Can I file a provisional patent on the business idea? I would like to protect the idea by fixing a date in case I decide to file a formal patent application within the year. Any thoughts? Our first thought is that since you mentioned that you've already hired an attorney, why not ask your attorney whether to file? The Dear Rich staff provides helpful information, but your attorney knows more details about your case and could provide specific, client-centric advice (and probably has malpractice insurance to boot). Our second thought is that there is no such thing as a "provisional patent" (a common misconception). There is only a provisional patent application (or PPA) -- a document that establishes an official U.S. patent application filing date. (Nolo offers a free guide to PPAs that you can download here.) 

As for filing your PPA with the USPTO, the PPA must be filed in the name of the inventor (or a co-inventor). A co-inventor is someone who contributes at least one novel and non-obvious concept that makes the invention patentable. If you didn't add anything patentable to the concept -- no Eureka! moments -- the PPA must be filed in the name of your co-worker. As for preserving the date of invention, you don't need a PPA to do so. Many inventors preserve their dates via an inventor's notebook. The important thing to keep in mind is that if you publicize or commercialize the idea, a patent application would have to be filed within one year in order to preserve patent rights. One way to avoid potential hassles is to work out a joint-ownership agreement with your former co-worker that will provide you with the right to exploit the idea while compensating him.

Dear Rich: I have a question. I create golf artwork using mainly golf tees and spikes. I have worked with some major golf equipment companies using their accessories. (They commissioned me for sculptures and other products.) Since I've been burned by several companies, should I get patents on my sculptures? I'm so glad you asked. The short answer to your question is that you can protect your sculptures with copyright, and possibly with a design patent (although we're not sure if the cost, hassles, and time involved in seeking a design patent merits the filing). 

Dear Rich: I have a question. Is it possible to copywrite an unknown tax loophole strategy? Or maybe even repackage a common tax loophole strategy? First, a brief note: Although it may seem insensitive to some readers, this blog will no longer accept questions from people who use the word "copywrite" instead of "copyright." (Copywriting refers to the business of creating promotional or advertising text.) The spellings for  the three topics we cover -- copyrights, trademarks, and patents -- are indicated in our blog title, domain name, and within all of our entries. Since the Dear Rich staff works diligently to provide answers to your questions, we feel that as a matter of respect, readers can choose their words with the same diligence. As always, exceptions will be extended to those with disabilities.  

In answer to your question, no, you cannot acquire copyright protection for a tax loophole strategy. Copyright does not protect ideas, methods, or systems. You may be able to apply for a patent for a tax strategy (the first such patent was issued in 2003), though a recent court decision makes it much more difficult to acquire such patents. In general, the popular sentiment about tax strategy patents is not good and as a senator, President Barack Obama sought to end them.

Finally, you refer to an "unknown tax loophole strategy". By definition, tax loopholes are provisions in the tax code that are exploited for personal gain. Therefore, we assume by using the term "unknown" that you mean you are the first to discover how to exploit an existing tax code provision. That can be dangerous territory (and may sometimes be illegal) and we advise you to tread carefully when touting the benefits of your strategies. 

Dear Rich: I am writing a chapter for a technical book and I want to use drawings from patents. Do I have to get copyright clearance? If so, from who? The publisher needs the clearance before they will accept my work. Aren't patent applications and issued patents in the public domain?

I'm so glad you asked. The Dear Rich staff wishes it didn't have to use mitigated speech, but the short answer is that you probably don't need clearance to reproduce drawings from published patents. According to the U.S. Patent Office, subject to some exceptions, "the text and drawings of a patent are typically not subject to copyright restrictions."

What makes the issue confusing is that (1) copyright office regulations (37 CFR 202.10(a)) do not prohibit registration of patent drawings; and (2) patent examiner regulations (MPEP 1.84 (s)) permit copyright notices and copyright claims regarding authorship in patent text or drawings. Which is why we end up returning to mitigated speech and why some attorneys answer your question by saying, "it depends".

The Dear Rich staff has been reproducing patent drawings freely and our publisher has done the same in its books about patents. We believe that even if not specifically exempted from copyright protection, the reproduction of patent drawings likely qualifies as a fair use since the drawings are used for transformative purposes. Finally, if you do seek to obtain permission, you should start with the person claiming patent rights. That person or entity may not always own rights in the drawings but they can likely direct you to the person who has the rights.

Postscript: Stephen Fishman, author of our favorite public domain treatise, brought our attention to the 2003 case, Rozenblat v. Sandia Corp. 69 USPQ2d 1474 (7th Cir 2003). In that case, the Seventh Circuit, acknowledged the copyrightability of an inventor's patent drawings (although ruling against the inventor as to the issue of infringement).

Dear Rich: My company has developed a database tool that allows people to review different rules in all 50 U.S. states. We're about to show it to some outsiders who might want to license it. Should we patent it? What should we do to protect it? I'm so glad you asked. The short answers to your questions are "Maybe" and "a few things." 

It seems like there are two things you'd like to protect: a database of information; and a tool that organizes and/or searches that information. As for the tool, if it is novel software code, that code may be protected under copyright law (PDF). The code and software process may also be protected under patent law. You say you're going to show this tool to outsiders soon. You don't need to be concerned about copyright protection, since you have a copyright on the software regardless of whether you register it. As for patent protection, you can preserve your rights by filing a provisional patent application before you show it to outsiders. A patent attorney can advise you, or your can use Nolo's online provisional patent application filing system. In reality, the filing is unlikely to do that much good because your right to go after those who infringe the patent won't kick in until you get the patent (which is years away). But don't give up! There is a way to protect your database tool (and we'll talk about it in a moment). 

As for your database of information, the various rules in the 50 states are likely to be public domain. But what may be proprietary (and protected under copyright law) are: (a) any explanatory or additional language you add; and (b) your selection and organization of the 50-state rules. According to the experts, there are really only six ways to organize data: alphabet, time, number, catergory, location, or hierarchy. According to public domain expert Stephen Fishman, the first three methods are unlikely to be protected; the other three may be protected if you can demonstrate a degree of creativity in the selection. If you're getting the feeling that protecting your database under copyright law will be difficult, you're on the right track. About ten years ago there was a rallying cry for legislation to protect databases -- but nothing ever came of it. (You'd have a better chance of protecting your database in Europe.)

So what's a database owner to do? According to the Dear Rich staff, your best approach is to use contract and trade secrecy law. End users who access your database should agree to an End User Agreement (EULA) that prohibits pilfering the tools or proprietary information. For example, that's the approach that eBay successfully used against Reverseauction.com to protect its customer database. Contractors who work on your database should sign nondisclosure agreements. When showing your database and tools to outsiders, use a typical nondisclosure agreement (here's an example). Some outsiders may balk at signing NDAs, particularly if they're already working on something similar, but a laywer can tweak the agreement to satisfy everyone. And of course, if you do license it, your license should require EULAs for end users and an assurance that the licensee won't challenge your proprietary claims to the database and tool.

Dear Rich: I have a question. Can you explain how a common sense thing like "selling pictures online" can be patented? I read recently about a settlement by Pictage against a company that had patented a method for selling pictures online. Where's the sense in this? Why isn't just the code for the method protected and not the idea? I'm so glad you asked. As to your first question -- where's the sense in this? -- the Dear Rich staff is unable to provide an answer except to say that "common sense" and the law are, at best, distant cousins.

As to your second question, our staff believes you may be mixing copyright and patent law. Under copyright law, the code, and not the method of business would be protected. Under patent law, the business method is protected, which is why so many companies sought and obtained iffy patent protection for their online commerce systems during the dot-com boom (one-click shopping anyone?). Many of these patents -- such as the patent at issue ("method and apparatus for storing and printing digital images") -- were filed during the period preceding the bursting Internet bubble and recently, a dispute about one such patent (filed in 1997), has stirred up issues regarding the legitimacy of all so-called Internet or business-method patents. As pointed out elsewhere, the company that owns the patent at issue doesn't operate a digital photo website; it appears to exist as a patent-holding company that pursues infringers, an entity sometimes derogatorily referred to  as a patent troll. Although this blog prides itself on providing practical information (and we don't want you to shy away from doing the right thing), we do suggest staying out of the way of  patent trolls since they are expert at steam rolling those who cannot afford to take them on in court.

Dear Rich: Do you know of or have you heard of IP enforcement insurance? We have been contacted by a broker who is selling enforcement insurance along with  protection insurance against third party claims. Are these companies legitimate? Should I be suspicious? They want a hefty nonrefundable "assessment fee" to asses the risk of insuring our company. This fee is not credited against premium payments. I'm so glad you asked. The short answers to your questions are, "yes, I have heard of them," and "yes, they are usually legitimate," and "yes, you should be suspicious of any insurance offer."

The policies that are available for patents, copyrights, and trademarks come in two forms: defensive insurance that pays for attorney fees, settlements, and judgments (up  to your policy limit) if you are sued over your IP property (that covers the 3rd party clams); and offensive enforcement (or abatement) insurance that pays part (or all) of your expenses if you sue an infringer. Enforcement policies are more popular among smaller entities with patents who cannot afford the hefty fees associated with patent litigation since the average cost of a patent lawsuit is reported to be $2 million (and often much more).

IP insurance companies screen potential customers to make sure the coast is clear regarding the patent or copyright they will potentially enforce. Among the issues you need to consider are whether the company lets you choose your own counsel, how much the company is entitled for reimbursement out of any final judgment or settlement, the company's rating, and of course, the premiums and upfront fees. (Sometimes these companies may help you successfully stop infringers, but you won't see much money from the effort.) One alternative when you can't afford to enforce your IP is to find an attorney that will take your case on contingency (and make sure to review the fees carefully). The Dear Rich staff cannot recommend or endorse any of these companies, but you can learn more about the subject at the IP Frontline site or at 2XR.

P.S.: Before considering any insurance, check your business liability policy to avoid overlaps.

Dear Rich: I have a question. Is it possible to write a piece of software that shows a patented device? For example, let's say I want to write a software application that shows a match on the screen, and when I click on the match, it lights the match and burns out. Would this infringe on the patent? I'm so glad you asked. The short answer is no. You can only infringe a patent if you make, use, sell, offer to sell, or import the patented device without authorization.

Displaying images of an invention or  explaining how an invention works doesn't infringe the patent, although there are two related concerns. It's unclear whether patent drawings -- the drawings included with the application (see above -- Patent No. 6,293,874) -- are protected by copyright. (Although there is no clear ruling, caselaw and federal regulations seem to indicate they are protected.) So, you're best served by having someone re-create the drawings unless you want to make a case for fair use.

Second, you can use the trademarked name of a patented invention without permission if it's for informational or editorial purposes --  that is, you're not using the trademark to sell something, or to confuse consumers. The same is true for trademark logos and designs (although, you should avoid any alterations to those visual images).

In any case, the patent division of the Dear Rich staff is excited about your software and its benefits --- after all, in the case of dangerous inventions like matches, the user can see how the invention operates without the potential hazards. (Let's not even think about all those inventors killed by their own inventions?)

Got a question for Dear Rich? Send it to dearrichquestion@gmail dot com, and make sure it has the header: "Question."