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How Do I Sell My Idea?

Catch-22

It would be great if there was a company that would simply buy your idea and give you a stack of money and ongoing royalties. Unfortunately, there is no such company. The market for raw ideas is small, very small. For every dollar looking to invest in an idea, there are hundreds of ideas chasing that dollar. As a result, investors screen out only the best and/or most protected ideas. Why should investors waste their time with bad ideas in a buyer’s market?

One reason the market for idea funding is so small is that you cannot sell your idea without telling someone what your idea is. But if you do tell someone what your idea is, there is nothing to prevent them from simply taking your idea and using it without paying you anything. You do not want to spend the money on a patent until you know if someone wants to buy your idea, but you cannot tell everyone your idea if they are just going to steal it. This is the Inventor’s Catch-22.

Non-Disclosure Agreements

Fortunately, there are ways to disclose your idea without surrendering your rights to that idea. One way is to demand the other party sign a non-disclosure agreement before you disclose the idea. Be careful though. Not all non-disclosure agreements are created equal. Some may be inadequate to protect your idea, some may protect the other party and not you, and some may be invalid altogether. If you want to use a non-disclosure agreement, it is important to hire an intellectual property lawyer to prepare the agreement, to make sure it is valid, and to ensure the agreement protects the full scope of the idea you want to disclose.

Another concern with using non-disclosure agreements is the unwillingness of many companies and potential investors to sign non-disclosure agreements. The reasons behind this unwillingness are threefold. First, many companies have their own research and development team. That means there is a possibility that the company is, coincidentally, currently working on the same idea you have. If the company signs your confidentiality agreement, and it just happens to be working on the same idea as yours, the company is just inviting a lawsuit. Even though the company may win the lawsuit by proving it had the idea first, it is always easier not to get sued in the first place.

Second, some companies may be of the impression that if your idea is not valuable enough to you for you to protect it with a patent, your idea is probably not valuable enough for the company to consider either. Third, many times companies would prefer to only hear idea pitches from individuals who already have a patent. Having a patent ensures the company that the resources it expends on investigating in your idea, it can eventually recoup through the monopoly granted by the patent.

Getting a Patent

If money was no object, hiring a patent lawyer to file a patent application on your idea would be a logical first step. While ideas are not patentable, embodiments of an idea, such as specific inventions, may indeed be patentable. A patent serves as notice to all potential infringers of the exact specifications of your invention and which products they are not allowed to make, use, or sell without your authorization. The patent also lets your potential investors know exactly what they are buying.

Once you file the patent application you can disclose your invention to third-parties without fear of your invention falling into the public domain. Since you cannot sue infringers until your patent actually issues (which could be three years or more), there is a possibility an infringer could exploit your invention before the patent issues. While that is a concern, infringers do not get grandfathered in. Once your patent issues, infringers have to stop infringing. If they have built up a demand for your invention, once your patent issues, you are the now the only one who can legally exploit that demand.

Is a Patent Right for You?

As noted above, if money is no object, getting a patent is a great idea. But money, especially with new companies, is in very limited supply. Patents are expensive, with good patents costing from $8,000 to $25,000 or more. Moreover, once you have the patent, you still have to consider how you intend to go after infringers. Patent infringement lawsuits can cost millions of dollars in attorneys’ fees. If you are lucky, you may be able to find a patent lawyer willing to take your case on a contingent fee basis, meaning the lawyer only gets paid if they win, and they only get a percentage of any settlement or award. However, if your patent was poorly prepared, the damages are small, and/or the infringer has little or no money, it may be difficult, if not impossible, to find an attorney willing to take your case on a contingent fee basis.

If you get a patent, you want a good patent. Unfortunately, not all patents are equal, so picking a good patent lawyer is key. If you hired fifty patent lawyers to draft a patent application covering your invention, you are going to get fifty different patents, all with different scopes of protection, some good, and some not so good.

So how do you find a good patent lawyer? Ask around. Find out which patent lawyers have successfully helped entrepreneurs in your area in the past and set up an initial consultation to spak with them. Your first meeting should be free. Talk to several patent lawyers and decide with whom you feel the most comfortable working.

After you have decided on a patent lawyer, but before you hire the him or her to file a patent application on your invention, sit down with the patent lawyer and go over all of the costs involved, from filing the patent application, to getting the patent, to paying maintenance fees, to bringing a lawsuit to stop an infringer. Even if you get only general estimates of these costs, it will help you decide how to proceed.

If there is a competitor out there who you know has a history of stealing inventions from small inventors, whether they have a patent or not, you need to take that into account. Discuss strategies with your lawyer, such as a contingent fee option, or licensing the invention to a competitor with deep enough pockets to fight a patent infringement lawsuit, that will allow you to get to trial and not have to abandon your patent infringement lawsuit halfway through for lack of funds. Once you know all of the costs, only then can you make an informed decision as to whether pursuing a patent at this time is right for you.

Conclusion

Whether you eventually decide to pursue a patent or not, it is critical that you base your decision on as much information as you can get. Remember, at the outset you are only asking the patent lawyer for information regarding the costs, timelines, and pros and cons associated with getting a patent. The ultimate decision as to whether or not to proceed with a patent is a business decision, not a legal decision. Use your patent lawyer to get the information you need to make the business decision that is right for you.

Brett Trout

Posted in General.

Do I Need a Patent?

A Business Decision vs. A Legal Decision
The question of whether you need a patent is more of a business decision than a legal decision. While a patent attorney can help you make that decision, by providing you with information regarding the costs and benefits of a patent, only you can make the final determination as to whether a patent is right for you or not.

Will a Patent Increase the Value of My Invention?
Think of a patent as a safe to store your valuables. If your invention (your valuables) is extremely valuable, a patent is probably right for you. If your invention is not valuable, a patent is probably not right for you.

Another way to look at a patent is as a value multiplier. If your invention is worth $100,000, a patent could possibly increase that value to $1,000,000 or more. Whereas if your invention is worth $0, no multiplier, not even a patent, can increase that value above $0.

How Do I Determine the Value of My Invention?
As you might imagine, most inventors believe their inventions are extremely valuable. So how do you place a fair value on your invention? While there is no precise formula, it is useful to consider things like how much money other people are willing to invest in your invention. If you have a contact at a major distributor who is interested in writing you a royalty check today, your invention has value. Conversely, if no one but you is willing to put their own money behind your invention, your invention may not have much value.

Catch-22
One problem inventors have is how do you find out how much someone is willing to invest in your invention without disclosing your invention first. While you may be be able to convince a potential investor to sign a confidentiality agreement, most will not. The problem then becomes that if you disclose your invention outside of a signed confidentiality agreement, you run the risk of possibly losing the right to patent your invention down the road. While some counties have disclosure grace periods, this is not always the case. And once your invention enters the public domain, you lose the right to patent it forever.

Since patents can run $7,500 to $30,000 or more, you are often left in a Catch-22. You do not want to spend the money on a patent application until you get an investor, but the investor will not talk to you until you file the patent application.

Typically, for a new inventor, the best course of action is to meet with a patent lawyer. Many patent lawyers provide an initial free consultation to give you the answers you need to make the business decision that is right for you.

Do Your Research
Patents, like the patent lawyers who write them, are not all created equal. For a given invention, two different patent lawyers will get you two different patents. More often than not, the better patent lawyer will get you the better patent. However, while the highest priced patent lawyer is not always the best patent lawyer, the lowest priced patent lawyer is likely the lowest priced for a reason.

Even the best patent lawyer in the world cannot guarantee they can get you a great patent on your invention. But you can be quite certain that if a bad patent lawyer does get you a patent, it will be easier for competitors to avoid infringing that patent, than if you had the patent prepared by a more competent patent lawyer.

Thankfully, if you do your research, you should be able to find a great patent lawyer willing to offer you an initial free consultation to answer the questions you need to take the next step toward protecting, or not protecting, your invention.

Brett Trout

Posted in General, Patent Law.

Brett Trout selected for The Best Lawyers® 2017 in both Patent Law and Information Technology Law

Brett J. Trout has been selected by his peers for inclusion in the 23rd Edition of The Best Lawyers in America® in the practice areas of Information Technology Law and Patent Law. The Best Lawyers in America® publication is the oldest peer-reviewed publication in the legal profession. Since 1983, Best Lawyers® continues to be regarded, by both professionals and the public, as the definitive guide to legal excellence in the United States.

The Best Lawyers in America®
The 2017 Best Lawyers in America® publication covers the largest and most targeted audience of any legal profession peer-review listing. Excerpts from the Best Lawyers® publication appear in The Washington Post, The Los Angeles Times, New York Magazine, and more than dozens of other regional publications, reaching more than 18 million readers. Best Lawyers selection process is based upon exhaustive and rigorous peer-review surveys. Over four million confidential evaluations by leading legal professionals are considered in the process. The American Lawyer and Corporate Counsel magazine describes The Best Lawyers in America® as “the most respected referral list of attorneys in practice.”

Disclaimer
“The fact that a lawyer has been voted by his or her peers into Best Lawyers in a legal practice area does not signify that the lawyer has been certified by a state board of legal specialization in that practice area or specialty. A listing in Best Lawyers does not guarantee a desired legal result.” – Best Lawyers

Posted in General.

Supreme Court Takes On Design Patent Damages

Apple v. Samsung

Apple applied for and received two design patents covering design elements on the front face of the Apple iPhone. Apple then successfully sued Samsung for infringement of these design patents. The jury awarded Apple damages in an amount equal to Samsung’s entire profits on its infringing smartphones. On appeal, the Court of Appeals for the Federal Circuit pointed to 35 U.S.C. 289, which states that the infringer shall be liable to the owner to the extent of his total profit.

The Supreme Court Steps In

Although the United Supreme Court has not ruled on a design patent case in over 120 years, the Supreme Court is taking up this one. The Supreme Court granted Samsung certiorari today, but just on the following issue:

“Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?”

Apple obviously opposes the grant of certiorari in this case.

Article of Manufacture

35 U.S.C. 289 states that a design patent infringer shall be liable for the total profit an infringer makes in association with an “article of manufacture.” Since the Patent Act does not define the term “article of manufacture,” Samsung suggests looking to the first edition of Black’s Law Dictionary, which was published only four years after Congress enacted the relevant statutory text in 1887. At that time, Black’s Law Dictionary defined an “article” as “one of several things presented as connected or forming a whole.” Black’s Law Dictionary 92 (1st ed. 1891). From Samsung’s perspective, it is clear that Congress never intended an infringer disgorge profits unrelated to the invention embodied in the design patent.

Conclusion

Like Samsung, it appears the Supreme Court also has some concerns about how lower courts have been construing “article of manufacture,” in apportioning damages in the context of design patent infringement. Although no one can say for sure, it is not inconceivable that the Supreme Court will reign in the concept of “article of manufacture,” to something more commensurate with Congress’ understanding of what that term meant in a time where the Gramophone, rather than the iPhone, was cutting edge technology. From a legislative history standpoint, a logic standpoint, and an equitable standpoint, the Supreme Court seems poised to limit damages in design patent cases to just those profits attributable to the patented design itself.

Brett Trout

Posted in Patent Law. Tagged with , , .

Not So Fast – “Happy Birthday To You” May Not Be in the Public Domain

The World’s Most popular Song

You all know the tune, so why do you rarely hear the song Happy Birthday To You in movies and on television? The reason is that from 1988 until yesterday Warner/Chappell Music, Inc. had been demanding royalties on the lyrics to the song. 1988 was the year Warner/Chappell purchased purchased Birchtree Ltd., the purported owner of the copyright in the lyrics, for an estimated $25 million, placing an estimated value on the Happy Birthday To You portion of the purchase at a reported $5 million. Since that time, Warner/Chappell has been collecting a reported $2 million per year in royalties on the lyrics. That all ended on September 22, 2015, when a California U.S. District Judge George H. King ruled that Warner/Chappell was not the owner of the copyright in the lyrics to the world’s most popular song.

What About the Music?

Songwriters are entitled to three separate copyrights on their songs. They can obtain a copyright in the music, the lyrics, and the performance. Each of these elements of a song are protected against infringement independently. For many pop songs, the performance copyright can be the most valuable, and therefore the most lucrative to license. Conversely, for “standards” like Happy Birthday To You where the song is more important than the singer, the license fee on the music and lyrics is more valuable than the license fee on any particular performance of the work.

Sometime prior to 1893, Mildred Hill and her sister, Patty Hill, wrote a song called “Good Morning.” While the lyrics of Good Morning were different than the lyrics of Happy Birthday To You, the music was the same. In 1893 the two sisters assigned the rights in Good Morning to Clayton Summy. That same year, Mr. Summy published Good Morning in a songbook entitled Song Stories for the Kindergarten and registered the copyright therein. A third Hill sister, Jessica, filed for renewal of the copyright to Song Stories for the Kindergarten in 1921 as Mildred Hill’s heir. Under the Copyright Act of 1909, songs could receive copyright protection for two consecutive 28-year terms. The copyright in the music therefore expired in 1949 and the music entered into the public domain.

The Lyrics

Although the music to Good Morning/Happy Birthday To You entered into the public domain in 1949, the lyrics did not. The lyrics to Happy Birthday To You did not appear in Song Stories for the Kindergarten. Instead, the lyrics to Happy Birthday To You do not appear to have been published until 1911, where they appeared in a book entitled The Elementary Worker and His Work. The lyrics were published several more times, but none of the publications, including The Elementary Worker and His Work credited any of the Hill sisters with authoring the lyrics. In 1934, Jessica Hill sued the producers of a work entitled As Thousands Cheer. During a deposition in that case, Patty Hill asserted that she had written the lyrics to Happy Birthday To You around the the same time she wrote Good Morning with her sister Mildred.

In 1935, Clayton F. Summy Company registered a copyright E51990. While the E51990 registration related it some way to Happy Birthday To You it is unclear exactly what that copyright registration covered. In 1942, the Hill foundation, an entity formed by Jessica and Patty Hill, sued Clayton F. Summy Company for licensing the Hill’s works without authorization of the Hill sisters. In 1944, the Hill sisters and Clayton F. Summy Company settled the lawsuit by entering into an agreement assigning to Clayton F. Summy Company various copyrights, including copyright E51990. Warner/Chappell claims to be a successor in interest to this assignment, but there is some dispute as to whether Warner/Chappell can establish a clear chain of title in the copyright from Clayton F. Summy Company to itself.

The Lawsuit

Musician Rupa Marya and filmmaker Robert Siegel set out to make a documentary about the the song “Happy Birthday To You.” While making the movie, Warner/Chappell, a music publishing division of the much larger Warner Music Group, demanded a license fee of $1,500 to use the song in the documentary. Rather than paying the fee, the pair filed a lawsuit against Warner Chappell Music in 2013. Marya/Siegel argued that Patty Hill was not the author of the lyrics to Happy Birthday To You. They argued that there were several publications of the lyrics prior to her first assertion of authorship more than forty years after her purported authorship. U.S. District Judge George H. King held that as a reasonable fact finder could find either way on this issue, a directed verdict on the issue of authorship was not warranted. There was also an argument that even if Patty Hill was the author of the lyrics, she she lost the copyright in those lyrics through divestive publication before 1935. When an author creates a work he or she is entitled to common law copyright protection. Back in 1935, when a work was published for the first time, it lost state common law protection. If the owner published the work published work in compliance with the requirements of the 1909 Copyright Act however, the owner could obtain federal protection for the published work. Failure to comply with the 1909 Copyright Act would cause the published work to irrevocably enter the public domain. As with the issue of authorship, the judge held that a directed verdict on the issue of divestive publication was not warranted. The judge held similarly on the issue of whether Mildred or Jessica Hill abandoned their rights in the lyrics prior to the publication and registration of E51990. While these issues may resurface if anyone else were to claim copyright in the lyrics to Happy Birthday To You, these issues would require additional findings of fact before any ruling could be made on them.

The Agreements

The final matter decided by the court was the issue of the transfer of the copyright in the lyrics to Happy Birthday To You. Marya/Siegel argued that Warner/Chappell had no evidence that Summy Co. ever obtained the copyright in the lyrics to Happy Birthday To You from the Hill sisters. Marya/Siegel contended that the evidence showed that the E51990 copyright registration was merely for one of several piano arrangements that Jessica Hill authorized Summy Co. to publish and register. Warner/Chappell argued that Summy Co. obtained the copyright in the lyrics to Happy Birthday To You through one or more of three separate agreements.

The First Agreement, allegedly executed in the 1890s was between Mildred and Patty Hill and Mr. Summy and Summy Co. The court held that this First Agreement did not “contemplate the use of the aforementioned songs in sound motion pictures or dramatic performances or in any other wise or manner except in sheet music form.” Warner/Chappell also argued the Second Agreement, allegedly entered into between Jessica Hill and Summy Co. in 1934 and 1935 transferred rights in the Happy Birthday lyrics to Summy Co. The court however, held the Second Agreement was merely for rights in the piano arrangements of the song. Warner/Chappell argued the Third Agreement entered into in 1944 between Jessica Hill and Summy Co. to resolve the Hill-Summy lawsuit included a transfer of the E51990 copyright registration. Unfortunately for Warner/Chappell, the Third Agreement does not include any discussion of the lyrics to Happy Birthday To You or any suggestion that the Hill sisters transferred their common law rights in the lyrics to Happy Birthday To You to Summy Co. The court went on to find that there is no other testimony or circumstantial evidence tending to show that a transfer of the lyrics occurred. The court noted that Warner/Chappell “cannot even point to evidence showing that the Hill sisters transferred their rights in the lyrics to the Hill Foundation, such that the Hill Foundation could, in turn, legitimately transfer them to Summy Co.”

Who Owns the Copyright in the Lyrics to Happy Birthday to You?

Unfortunately, courts can only decide the specific issues presented to them for adjudication. Once the court decided that there was insufficient evidence to prove Warner/Chappell owned the copyright in the lyrics Happy Birthday To You, the court was not able to resolve the unasked question of who actually does own the copyright in those lyrics. For now, the copyright in the lyrics to Happy Birthday To You appears to be an “Orphan Work.” So while it is clear for the time being that Warner/Chappell does not own the copyright, it is unclear who does. Although highly unlikely, it is possible that a potential owner may surface with a chain of title to the work, at which point that owner may have a cause of action for copyright infringement against anyone using the lyrics to Happy Birthday To You. This “problem” with orphan works is well known and results from the entertainment industry’s relentless push to continually extend the length of copyright protection.

Unlike “patents” which last twenty years from their filing date, copyrights can last well over 100 years. Article I, Section 8, Clause 8 of the United States Constitution secures to authors, for a limited time, the exclusive right to their writings. The First Congress enacted the Copyright Act of 1790, granting American authors the right to print, re-print, or publish their work for a period of fourteen years and to renew that term for another fourteen years. Today, for an individual author, copyright protection extends for the life of the author, plus 70 years. For anonymous works and works for hire, the term is 95 years from publication, or 120 years from creation, whichever comes first. Applying this calculation to the lyrics to Happy Birthday To You, there is still a possibilty of someone claiming copyright in the lyrics until the year 2030, which is 95 years after their first publication by the authors.

Conclusion

While it is clear Warner/Chappell can no longer demand royalties for use of the lyrics to Happy Birthday To You, it is less clear that the lyrics are in the public domain. Given the extensive research done by both parties in the Marya, et al. v. Warner/Chappell Music Inc. et al. case above, it seems unlikely another owner will come out of the woodwork any time soon. Without the ability to definitively confirm the passage of the lyrics into the public domain however, any usage of the lyrics must come with the clear warning of caveat emptor.

Brett Trout

Posted in Copyright Law. Tagged with , , , , .

Brett Trout Named Iowa Academy of Trial Lawyers Fellow

Des Moines patent attorney Brett J. Trout has just been named a Fellow of the Iowa Academy of Trial Lawyers. Membership in the Academy is by invitation only, upon sponsorship and recommendation from peers and judges, and unanimous approval by the Board of Governors.

Established in 1962, the Iowa Academy of Trial Lawyers fosters the proficiency and effectiveness of attorneys in the pleading, trial, and general handling of all forms of litigation, and promotes improvements in jurisprudence which will protect the interests and rights of the parties in litigation. Membership in the Academy is limited to 250 attorneys.

Posted in General.

Brett Trout to Speak at The Seventh Annual Creighton Law Review Symposium

The 2015 Seventh Annual Creighton Law Review Symposium addresses the theme of Ethics and Electronics: Navigating Legal Ethics and New Technology. The symposium will be held March 18, 2015, at Creighton University’s School of Law. Brett Trout’s presentation is entitled The Ethical Lawyer and the Tao of Technology and will begin at 8:15a.m. Also presenting at the Symposium will be Cynthia A. Brown, John G. Browning, and Fr. Greg O’Meara. Contact Creighton Law Review for additional information about the Symposium.

Brett Trout

Posted in General.

Inventing to Nowhere

The Frightening Irony
The documentary Inventing to Nowhere boils a series of complex questions down into one: Why are we allowing companies that stifle innovation to dictate our country’s innovation strategy?

The History
The Revolutionary War placed a huge financial burden on the United States. The framers of our Constitution correctly anticipated that the protection of inventors would be critical to the success of our country, so much so, that in Article I, Section 8, Clause 8, of the Constitution they empowered Congress:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

For over 200 years this language, and the patent laws resulting therefrom, have promoted innovation in this country, by rewarding and protecting inventors for the invaluable work that they do.

From its very beginning, through the industrial revolution and beyond, the United States has led the world in innovation. The film details how constitutional protections and new strong patent laws put inventors first and fueled innovation. This innovation transformed a country drowning in Revolutionary War debt into world leader, driving the industrial revolution and a global technological transformation.

The unique protections these laws afforded American inventors led to world-changing innovations, including the telegraph, the sewing machine, the light bulb, the electric motor, the cotton gin, the airplane and many others.

The Law
The impetus for the United States’ past global technological leadership stemmed from our forward-thinking approach to protecting inventors. Laws that protect inventors, stimulate inventors to innovate. Conversely, laws that do not protect inventors, discourage inventors from innovating, by allowing moribund companies to steal inventions without having to invest time or money in innovation themselves.

Therefore, the basic premise of our patent system is that in return for disclosing all of the details about your invention, the government will grant you, for a limited period of time, a monopoly on making, using, and selling your invention. This quid pro quo is what motivates inventors to dedicate their lives to create all of the things that make our lives better. Without patents, large companies would wait for inventors to invent, and then simply steal the idea and sell it themselves. This would obviously undermine the motivation to innovate, and would cause at least some inventors to stop inventing.

The very first law in our country, the Constitution, still includes protections for inventors. This one clause has spawned thousands of additional laws and regulations governing how we protect our inventors. Despite being radical in their approach to aggressively protecting inventors, these laws have proven to be quite prescient. The laws include many provisions designed specifically to protect small inventors from larger, less innovative, more powerful, competitors.

One such innovation is the provision that grants inventors not only the damages they can prove a competitor caused by stealing their patented invention, but triple that amount, it they can prove the competitor was willful in its infringement. This “treble damages” provision encourages small inventors to sue larger infringers, while discouraging larger infringers from infringing patents in the first place. These laws have worked well at protecting inventors and encouraging innovation for the past two centuries.

The Ol’ Bait and Switch
Now place yourself in the position of a well-established widget manufacturer in a well-established widget market. Barriers to entry are high, which keeps out competitors and allows you to make higher profits on each widget. The only thing you have to worry about is a smaller competitor inventing a better, smaller, faster, cheaper widget.

What is a lazy company to do? It could invest in innovation itself, but that strategy has at least two drawbacks. First, research and development requires dedication of a lot of time and money toward something that may not even pan out. Second, since innovation involves more than a little luck, there is no guarantee such efforts at innovation will be more successful than those of a smaller upstart. While investing in innovation is great for this country, consumers, and inventors, it may not be so great for lazy companies that thrive on the status quo.

An alternative to investing in innovation, is to stifle innovation by paying lawmakers to make laws that hurt inventors. While this strategy can be very efficient in eliminating competition, it can be a tough sell to consumers, especially since these laws can leave consumers stuck paying more money for less innovative products. And since many consumers are also voters, pitching innovation stifling legislation to lawmakers can also be an uphill battle. To overcome this obvious public relations problem lazy companies needed a villain to justify their call for new innovation stifling laws.

Enter the patent troll. A patent troll is a company that does no innovation on its own. It does not make, use, or sell anything. Its only purpose is to buy patents and sue, or at least threaten to sue, other businesses that actually do make, use, or sell something. Patent trolls rely on the high cost of patent litigation (usually $2 Million dollars per side) and low royalty demands to build their war chest. By steering clear of deep-pocketed infringers, patent trolls churn lucrative profits with little effort.

The key to being a successful Patent Troll is to convince the accused infringer that a lawsuit will be filed. Even if the accused infringer were to fight the lawsuit and win, there is very little likelihood that the accused infringer will ever recoup the huge attorney fees spent in its defense. Since the license fees the patent troll demands are less than the cost of even successfully defending a lawsuit, smaller companies often agree to pay the license fee. The worst part is that the patent troll then uses this payment to buy more patents and pursue more companies.

Patent trolls are a bad thing. They do not create anything and they stifle innovation. The problem is how do you pass a law that differentiates the very large number of legitimate small inventors trying to protect their inventions, from the very small number of patent trolls trying to game the system. The great thing is, at least from a lazy company’s standpoint, you do not have to. Simply convince people how bad patent trolls are, and then convince lawmakers to pass laws that cripple patent trolls. To you, the fact that resulting laws like the “Leahy-Smith America Invents Act,” (AIA) also cripple legitimate small inventors is a feature, not a bug. To a company that sees any innovation as a threat to its continued ability to sell old technology at high prices, crippling everyone with a patent is a great idea.

Long Term Woes
While passing laws like the AIA may stop some patent trolls in the short term, in the long term, its effects on small inventors may be catastrophic. By undermining patents, by encouraging inventors not to file patents, by it making harder for small inventors to get and enforce their patents, and by adding uncertainty to the entire United States patent system, the AIA punishes innovation and rewards the status quo. Lawws like the AIA make would-be small inventors, who see the costs of getting a patent going up, the odds of getting a patent going down, the cost of enforcing a patent going way up, and the enforceability of patents becoming more and more unpredictable, less likely to leave their current jobs and devote their time to innovation.

And even those dedicated inventors still willing to take a chance on themselves will find potential investors more difficult to find. Consider that a patent an investor invests in may have a market valuation of $1,000,000 upon issuance. Now consider that single new patent law can cut that valuation in half, or even bring the valuation all of the way to zero. Investors are therefore less likely to invest in assets that a competitor is capable of decimating with a well-placed campaign contribution to the right lawmaker.

While investors can factor in the increased costs and decreased likelihood of getting a patent, evaluating the increasing uncertainty resulting from laws like the AIA, is difficult. This uncertainty makes investors more likely to bypass small investors all together, in favor of less volatile ventures. While laws like the AIA, that hurt small inventors, may not hurt innovation in the short term, by elimination inventors in the long term, these anti-innovative laws cannot help but to hasten our downfall from our former position as leader in global innovation. Unfortunately, by the time anyone realizes this, it may be too late.

The Answer?
So what is the film’s answer to dealing with patent trolls? The film’s companion website suggests a four-pronged approach. First, improve patent quality. Preventing bad patents from issuing in the first place makes fewer bad patents available for patent trolls to acquire. Since patent trolls do not invent anything themselves, drying up the bad patents dries up the patent trolls. Ways to improve patent quality include: 1) fully funding the United States Patent and Trademark Office (USPTO) by allowing the USPTO to retain all of its user fees; 2) investing in additional human and other resources at the USPTO; and 3) and paying patent examiners based upon the quality, rather than the quantity, of the patents they grant.

Second, enhance certainty in the patent system. In the case of patents certainty is often preferable to perfection. While our patent system is not perfect, if encouraging global innovation is the metric, since as far back as 1790, our system has been working pretty well. Changing our patent laws runs the unnecessary risk not only of unintended consequences, but of also increasing the uncertainty associated with our patent system.

Third, preserve market-based valuations associated with patents. As the uncertainty about the future direction of our patent system increases, the risk associated with the future enforceability of patents also increases, causing the present value of patents to decrease. It is simply not fair to change our country’s 200 year contract with inventors mid-stream. We need to preserve the value of patents promised to inventors that encouraged them to innovate in the first place.

Fourth, we need to focus on legislation that discourages litigation abuse, by both patent owners and accused infringers. By narrowly focusing on the precise problem, we can curtail the problem without punishing innovators. Awarding attorney fees for successfully fighting off patent trolls is a good start with few negative externalities.

Conclusion
It is possible to address the problem of patent trolls without punishing small inventors. The key is not allowing large anti-innovation companies and their associated campaign contributions to dictate the solution, a solution which, while great for patent attorneys, is not only bad for inventors and consumers, but bad for the future of our country.

Brett Trout

Posted in Patent Law.

Who Owns the Copyright on a Photograph Taken by a Monkey?

The Case of the Monkey Photographer
Back in 2011, photographer David Slater found himself in a national park in North Sulawesi, Indonesia, taking pictures of critically endangered crested black macaque monkeys. After taking some pictures of the monkeys, Slater set his camera down, where one of the monkeys picked it up. The monkey then began taking hundreds of pictures. Although most of the pictures were out of focus, a few turned out to be quite impressive, like the selfie you see to your right. The Caters News Agency claimed copyright in the photos, but critics questioned how anyone could claim copyright in photos taken by monkeys.

Copyright Law
As soon as a copyrightable work is fixed in a tangible medium i.e.(written down on paper, filmed, recorded, etc.), the copyright immediately becomes the property of its author. If an individual creates a work outside of any contractual or employment obligation, the individual is the author. If an individual creates a work as part of an employment obligation or as a “work for hire” the employer is the author. An author can assign the copyright in the work to a third party. In such a case, the third party would own the copyright, but the authorship would not change. But since a monkey cannot contract, a monkey cannot be either an employer or an assignor, and there are no laws or legal cases in the United States addressing whether a monkey can be an author of a copyrightable work.

The Controversy
A user posted several of the images taken by the monkeys to Wikimedia Commons, a media file repository for public domain and freely-licensed educational media content. Slater provided Wikimedia with a takedown request for the images, claiming the images were copyrighted. Wikimedia denied the takedown request, taking the position that Slater did not own the copyright in the images.

A Copyright Rules Revision
Last week there was no clear rule as to whether a work created by a non-human animal could be copyrighted. This week there is. Or at least there may be. On Tuesday, the Copyright Office released a draft of its first major revision of its practices in more than twenty years. Buried within the 1,200 pages of administrative practices is a statement that “The Office will not register works produced by nature, animals, or plants. Likewise, the Office cannot register a work purportedly created by divine or supernatural beings, although the Office may register a work where the application or the deposit copy state that the work was inspired by a divine spirit.” This seems to settle the matter, at least for now.

But…
While the new proposed administrative rules seem to settle the matter, there are still several outstanding considerations. First, the proposed rules may be revised before they are adopted. It the adopted rules do not include the prohibition on copyright registration for works produced by animals, we will be back to square one. Second, Congress could act to revise the Copyright Law to allow the registration of animal produced works, which would trump the Copyright Office’s administrative procedures. Third, a court could rule the administrative rules invalid on constitutional or other grounds. Fourth, while the new proposed rules appear to settle the issue in the United States, the issue is still unsettled in most other countries. If some countries decide to allow copyright in animal produced works, while others do not, we could end up with a menagerie of worldwide copyright laws.

Brett Trout

Posted in Copyright Law, Internet Law.

Brett Trout Designated Des Moines Patent Law “Lawyer of the Year”

Five Years Running
For the fifth year in a row, Brett J. Trout has been selected by his peers for inclusion in the annual edition of The Best Lawyers in America®. For 2014, Mr. Trout has been selected for inclusion in the area of Patent Law (Tier 2). The Best Lawyers in America® publication is the oldest peer-reviewed publication in the legal profession. Since 1983, Best Lawyers® continues to be regarded, by both professionals and the public, as the definitive guide to legal excellence in the United States.

Lawyer of the Year
For 2014, The Best Lawyers in America® has also designated Brett J. Trout Lawyer of the Year. Only one lawyer in each practice area and geographic area is honored as the “Lawyer of the Year.” The “Lawyer of the Year” designation reflects the abilities, professionalism, and integrity of the lawyer as judged by their peers. Each “Lawyer of the Year” is selected based upon exhaustive peer-review assessments conducted with thousands of leading lawyers each year.

The Best Lawyers in America
The 2014 Best Lawyers in America® publication covers the largest and most targeted audience of any legal profession peer-review listing. Excerpts from the Best Lawyers® publication appear in The Washington Post, The Los Angeles Times, New York Magazine, and more than dozens of other regional publications, reaching more than 18 million readers. Best Lawyers selection process is based upon exhaustive and rigorous peer-review surveys. Over four million confidential evaluations by leading legal professionals are considered in the process. The American Lawyer and Corporate Counsel magazine describes The Best Lawyers in America® as “the most respected referral list of attorneys in practice.”

Disclaimer
“The fact that a lawyer has been voted by his or her peers into Best Lawyers in a legal practice area does not signify that the lawyer has been certified by a state board of legal specialization in that practice area or specialty. A listing in Best Lawyers does not guarantee a desired legal result.” – Best Lawyers

Posted in Patent Law. Tagged with , .