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  • I am going to briefly go over the following three areas you should consider when starting a business. The handout you have been given goes into much more detail than I will be covering today, but it will act as a guide to help you outside of class.
  • Everyone who decides to go into business for themselves goes into business for different reasons. Regardless of why you decided to start a business, you should start with a business plan.The purpose of a business plan is first and foremost a way for you to organize what it is your business will be doing. You need to look at your purpose for starting your business. It helps you evaluate your strengths and weaknesses as well as help you define your target market.What is the point of having a target market? You cannot adequately service everyone from the get-go. If you have a specific market you want to target, it is easier to relay this information to people you know or networking organizations you belong to, allowing them to listen for possible referral sources for you.Once your write your business, you should update it as the focus of your organization becomes clearer and better defined.You will want to write down your current goals along with your yearly goals from your first year though your fifth year as well as your 10 year goals.A business plan can be used to help you get financing from banks and other investors because it acts as a roadmap of what you have gotten in place and how you want to grow.In the handout you will see that I have included an outline of parts you may want to include in your business plan. These are just to act as a guide. You can include different sections as they pertain to your needs.
  • Sole Proprietorship Can just start doing business – You and the business are one No need to file anything with the State Pay taxes under your own social security number You are personally liablePartnership Two or more people going into business with each other No need to file anything with the state if you are operating as a general partnership Each person pays taxes on their own Each person is liable for the debts and you may be liable for your partner’s actionsGeneral partners – manage the business and are equally liable for its debtsLimited partners – may invest but not be directly involved in management and are liable only to the extent of their investments.Limited Liability Partnership – Usually used by attorneys or accounting firms. Limits the partner’s liability to the amount he/she invested in the company.Corporations Business is separate entity from the owners Requires Articles of Incorporation to be filed with the Secretary of State Should have your by-laws which state how meetings should be held, when they should be held Minimum franchise tax fee of $800 must be paid each year Must have an annual meeting and send in statement to the Secretary of State every year stating you are in compliance The business is liable and not the individuals – Of course there are exceptions to these rulesLimited Liability CorporationOwners and managers have limited liability For tax purposes 1 owner is taxed as sole proprietorshipMore than 1 owner is taxed as partnershipMay be owned by individuals or business entitiesFormation is simpler and faster than forming and maintaining a corporationFormal oral or written operating agreement must be entered intoMinimum tax of $800/yearArticles of Organization must be filed with Secretary of State
  • Everyone who decides to go into business for themselves goes into business for different reasons. Regardless of why you decided to start a business, you should start with a business plan.The purpose of a business plan is first and foremost a way for you to organize what it is your business will be doing. You need to look at your purpose for starting your business. It helps you evaluate your strengths and weaknesses as well as help you define your target market.What is the point of having a target market? You cannot adequately service everyone from the get-go. If you have a specific market you want to target, it is easier to relay this information to people you know or networking organizations you belong to, allowing them to listen for possible referral sources for you.Once your write your business, you should update it as the focus of your organization becomes clearer and better defined.You will want to write down your current goals along with your yearly goals from your first year though your fifth year as well as your 10 year goals.A business plan can be used to help you get financing from banks and other investors because it acts as a roadmap of what you have gotten in place and how you want to grow.In the handout you will see that I have included an outline of parts you may want to include in your business plan. These are just to act as a guide. You can include different sections as they pertain to your needs.
  • Everyone who decides to go into business for themselves goes into business for different reasons. Regardless of why you decided to start a business, you should start with a business plan.The purpose of a business plan is first and foremost a way for you to organize what it is your business will be doing. You need to look at your purpose for starting your business. It helps you evaluate your strengths and weaknesses as well as help you define your target market.What is the point of having a target market? You cannot adequately service everyone from the get-go. If you have a specific market you want to target, it is easier to relay this information to people you know or networking organizations you belong to, allowing them to listen for possible referral sources for you.Once your write your business, you should update it as the focus of your organization becomes clearer and better defined.You will want to write down your current goals along with your yearly goals from your first year though your fifth year as well as your 10 year goals.A business plan can be used to help you get financing from banks and other investors because it acts as a roadmap of what you have gotten in place and how you want to grow.In the handout you will see that I have included an outline of parts you may want to include in your business plan. These are just to act as a guide. You can include different sections as they pertain to your needs.
  • You need to file a fictitious business name, aka FBN, if you are operating under any name other than your own. It is only $30 for the first one and $5 for each additional one you file at the same time.You can do a search online or in person at the San Diego County Recorder’s office. Filing a FBN does not guarantee you will be the only business operating under that name, which is why you might want to file a trademark.After you filed the paperwork, you need to publish it in a local paper for four weeks before it is officially registered.Again, the handout that has been provided has more detailed information to help you through the process. If you have any additional questions you can ask me during the break or after class.

Transcript

  • 1. Presented by: Eric A. Hanscom Managing Attorney2141 Palomar Airport Road, Suite 320 Phone: (760) 651 0142Carlsbad, CA 92011 Email: info@iciplaw.com Website: www.iciplaw.com Other Offices in Hong Kong and Bangkok
  • 2. 35 U.S.C. §102: You have 1 year from the time you first “publicly disclose” your invention until you have to file for patent protection.
  • 3. Patents Trademarks Copyrights Trade Secrets• A right to exclude others • Any name, symbol, figure, • The legal right granted to • A formula, process, device, from manufacturing, letter, word, or mark an author, composer, or item of information used selling, or using your adopted and used by a playwright, publisher, or by a business that has invention for a number of manufacturer or merchant distributor to exclusive economic value because it years. in order to designate his or publication, production, is not generally known or her goods or services and sale, or distribution of a easily discovered by to distinguish them from literary, musical, dramatic, observation or examination those manufactured or sold or artistic work. and for which reasonable by others. efforts to maintain secrecy have been made.
  • 4.  A patent is a right to exclude others from manufacturing, selling, or using your invention for a number of years. Eg. The Apple iPod
  • 5.  A trademark is any name, symbol, figure, letter, word, or mark adopted and used by a manufacturer or merchant in order to designate his or her goods and to distinguish them from those manufactured or sold by others.  Eg. iPod and “Trade Dress” - the overall image of a product used in its marketing or sales that is composed of the nonfunctional elements of its design, packaging, or labeling (as colors, package shape, or symbols)  NOTE: Trade dress is protected by the Trademark (Lanham) Act of 1946 if it is not a functional part of the product, has acquired secondary meaning, and there is likelihood of confusion as to the source of the product on the part of the consumer if a competing product has a similar trade dress.
  • 6.  A copyright is the legal right granted to an author, composer, playwright, publisher, or distributor to exclusive publication, production, sale, or distribution of a literary, musical, dramatic, or artistic work. Eg. Harry Potter and the Sorcerer’s Stone
  • 7.  Trade Secret - a formula, process, device, or item of information used by a business that has economic value because it is not generally known or easily discovered by observation or examination and for which reasonable efforts to maintain secrecy have been made. Eg. The formula of Coca-Cola
  • 8. Type of Average time until Expect to pay Length of Renew- Practical examples in Intellectual Protects issue or final (attorney fees + protection able? business Property rejection? costs)* 20 years from Devices, substances,Patent (Utility) How something works 3 years $7,000 - 50,000 date of filing No business methods. application* Patent 1 year grace period to file a 1 year "grace Devices, substances, 1 year $3,000 - $6,000 No (Provisional) utility patent application period" business methods. Patent (US 14 years from Unique shapes of How something looks 1 year $2,000 No Design) date of issue products Patent Up to 25 years Unique shapes of (European How something looks 5 months $2,000 - $5,000 from date of No products Design) issue Potentially Name or logo related to Company names, Trademark 10 months $1,000 - $5,000 Infinite w/ 10 Yes business identity brand names, slogans. year extensions Websites, owners Life of author Copyright Artistic creations 3 weeks $300 - $1,000 No manuals, packaging, plus 70 years advertising materials.* Certain Exceptions Apply
  • 9. • Venture Capitol Investors • Hedge Funds • Will want to see solid business plan including IP strategy. • Healthcare • EnvironmentGovernment Grant • • Antiterrorism Will want to see solid business plan including IP strategy. • Friends FFF • Family • Followers You • Last choice
  • 10. Legal PracticalConsiderations Considerations Protect your idea Sell your idea from theft Barriers to Finance your ideaprotecting your idea
  • 11. • You must invent or discover something new and useful • Only the following subject matter can be patented: • Processes (business methods) Can A Patent • Manufactures (products)Protect Your Idea? • Compositions of matter (substances) (35 U.S.C §101) • Is there a patent, published paper (including published patent applications), or other public disclosure? • Did it happen before your invention date or more than 1 year before the filing of the application?Did Someone Else • This is true even if you had no knowledge of the other public disclosure Beat You To It? (35 U.S.C. §102) • No patent if your invention is an “obvious improvement” over someone else’s public disclosure • Usually the largest hurdle in obtaining a patentIs Your Invention • This is true even if you had no knowledge of the other public disclosure Truly Unique? (35 U.S.C. §103)
  • 12. Prior Art Search Analyze the Results• Looks for issued • Should I apply for a utility patents, published patent patent? applications, and products on the • Business decision based upon marketplace that are similar to prior art references found and yours economic benefit of obtaining (or• Everything cannot be found at least filing for) a patent• Use a Prior Art Searching company that ONLY does prior art searches; Do NOT use invention submission companies who will give you a “package deal” that includes a prior art search and a patent application
  • 13. File Application Allowance Issue OfficeFile Application Response Allowance Issue Action Office Final OfficeFile Application Response Abandon Action Action Office Final OfficeFile Application Response Response Allowance Issue Action Action OfficeFile Application Response Allowance Issue Action File Continuation Office Response Allowance Issue Application Action
  • 14. IssuedFile Application Allowance Patent Renewal Response Fees (Utility Rejection /Office (written, pho Patents Action ne call, visit only) USPTO)
  • 15. Background of Detailed Abstract Drawings Claims the Invention Description• Summary of 150 • A simple • This section • This is the words or Less introduction to describes section that what your exactly how the protects your invention is. invention works ideas Describes the by referring to • It lays out the general field of the drawings. individual the invention, Describes in elements of and sets up why detail why your your idea – the prior art invention is not basically what fails to solve the a mere “obvious you “claim” as problem that improvement” your invention. your invention over existing fixes. patented inventions.
  • 16.  Abstract Drawings Background of the Invention Detailed Description Claims
  • 17.  A simple introduction to what your invention is
  • 18.  This section describes exactly how the invention works by referring to the drawings.
  • 19.  This is the section that protects your ideas It lays out the individual elements of your idea – basically what you “claim” as your invention.
  • 20. A Patent gives you’re the right to A patent is good only in the countryexclude others from making, using, where you have the patent. or selling the invention. 4 Take-Away Items you should remember To infringe a patent, you must To infringe a claim, you must infringe infringe one claim of the patent. every element of the claim.
  • 21. Your Invention Patent 1: Narrow Claims Patent 2: Broad Claims• A Laptop that includes Claim 1: A Laptop A Scanner A Scanner Comprising• A Scanner• A Copier• A Fax Claim 2: A Laptop A Copier A Copier Comprising• A Printer Claim 1: A Laptop Comprising Claim 3: A Laptop A Fax A Fax Comprising Claim 4: A Laptop A Printer A Printer Comprising The Competition Throckmorton V. Cox, III: 12-year old Francoise’s Computer Center: In the Hing Wong: A Hong Kong company computer genius living in New York U.S., he builds a laptop computer importing into the U.S. a laptop who has customized his laptop to that contains a fax. He does not sell computer with a photocopier and a contain a scanner, fax, printer, and it in the U.S., but rather exports all of scanner built into it. cell phone. He made it himself, and the laptops to France. has never sold it to anyone.
  • 22. He is a Chilean businessman who makes laptops in China. What about Felipe Santiago?He ships the These laptops laptops contain a fax,directly from scanner, China to printer, and Germany. photocopier.
  • 23. Presented by: Eric A. Hanscom Managing Attorney2141 Palomar Airport Road, Suite 320 Phone: (760) 651 0142Carlsbad, CA 92011 Email: info@iciplaw.com Website: www.iciplaw.com Other Offices in Hong Kong and Bangkok
  • 24. Trademarks (Products) Trademarks (45 Classes)Servicemarks (Services)
  • 25. Business Name, Logo Preliminary ConsiderationsSlogan, Logo Is my name unique enough to get a trademark? (The more fanciful the better. Nike, Xerox v. San Diego Legal Services. Colorful logos, tag lines,Product Name slogans are all good. Should I pay for a trademarkColor, Sound, Shape search?
  • 26. File Allowance Publication OppositionApplication Office Response Trademark First renewal fees Action Issues are due between years 5 and 6 Subsequent renewal fess are due every 10 years
  • 27. Foreign Patents must be filed: • 40 – 50% of •Directly in the foreign country USA world’s market •Buy yourself time with a Patent for many goods Cooperation Treaty (PCT) filingKey Countries Other • Europe, Japan, Buyers Australia, Canada Foreign Trademarks can be filed: • China / Hong •Directly in the foreign country Manufactur- Kong, Taiwan, •En masse through the Madrid Protocol ing Sites South Korea, Vietnam, Thailand Defensive Patents / • China Trademarks Key Factors: •Number of People in the Country •Average Income per Person •Geographic and/or Cultural Factors: Will they buy your product? Shipping • Hong Kong, •Enforcement of Intellectual Property: Ports Will that country enforce your IP? Singapore
  • 28.  Foreign Patents must be filed:  Directly in the foreign country; or  Buy yourself time with a Paris Convention (PCT) filing Foreign Trademarks can be filed:  Directly in the foreign country; or  En masse through the Madrid Protocol.
  • 29.  Key Factors:  Number of People in the Country  Average Income per Person  Geographic and/or Cultural Factors  Enforcement of Intellectual Property
  • 30.  Key Countries: USA  40 – 50% of world’s market for many goods Other Buyers  Europe, Japan, Australia, Canada Manufacturing Sites  China / Hong Kong, Taiwan, South Korea, Vietnam, Thailand Defensive Patents / Trademarks: China Shipping Ports: Hong Kong, Singapore
  • 31. What should • Websites (before and after putting on- line) inventors • Brochures and other Advertising Materials consider • Packagingcopyrighting? • Owner’s Manuals • Loser usually has to pay some attorney’s fees and court costs Copyright • Statutory Damages of up to $150,000 per infringement for knowing and willful Lawsuits infringement.
  • 32. Winners Losers Too Scattered / Wait Too Good Luck (1/3) Long Spend Too Much / Too Little Money on IP Tenacity (1/3) Do-it-yourselfersGood Invention (1/3)
  • 33. Is it a business or a hobby? Business are created to make money,hobbies are for fun. If your invention is just a hobby, sure, try todo it yourself, but don’t expect to succeed. Mistakes made with IP applications are often not “discovered” until years after filing, and you may lose potential patent and trademark rights during this time. A solid IP strategy is essential for attracting investors. Seasoned investors will look carefully at your patent, trademark and copyright applications before they invest in your invention, so why not do it right the first time? As the inventor, what is a good use of your time? Successful inventors focus on what they do best and hire professionals for the rest.
  • 34. “There are two types of inventors: the paranoid, and the more paranoid” • Ron Reardon, President, National Association of Patent Practitioners (NAPP), NAPP Conference, 2009. Common Concern: “The Chinese will steal my idea so I won’t use them for prototypes Never tell your idea to anyone “There are 3 things every or production” and die happily, but without successful inventor needs to Fact: There is a security having made any money off do: 1) trust some people, 2) concern in overseas your idea, because you kept take some chances, and 3) manufacturing, but I have seen your secret. spend some money” much more “copying of successful products” than “stealing of ideas”.
  • 35. Invention PromotionCompanies“International” Trademark companiesBeware the “free ticket” to discuss yourpatent (it is probably one way)
  • 36. Presented by: Eric A. Hanscom Managing Attorney2141 Palomar Airport Road, Suite 320 Phone: (760) 651 0142Carlsbad, CA 92011 Email: info@iciplaw.com Website: www.iciplaw.com Other Offices in Hong Kong and Bangkok
  • 37. Making / Selling it Yourself:Find Your Target Audience • Find a Factory, avoid front door and back door theft issues.• Warning to those who don’t like “selling”: you will have to “sell” your invention to someone • Transportation to Dock• If no one will buy it, probably won’t make money • Shipping • Warehouse in Long Beach • CustomsDo Research • Distribution • Sales• Trade Shows • Charge-backs• Visit Local Stores • AdvertisingCreate a Prototype? Theoretically not • Allowancesnecessary to file a patent application, but • Defective Policiespractically, YES, you should have one. • Accounting• U.S. • Unforeseen Circumstances• Asia
  • 38. License Assignment (Selling Your IP)• License is a “rental” of your • Assignment is a sale IP • “You give me $500,000, I’ll• “You have the rights to make give you the patent.” and sell products covered by • Less common than licensing this patent in California for because the assignee is less one year. I get $25,000 up likely to pay a decent price front, and you pay me 3% of with an unproven invention, gross sales per year. and once you have “proven”• Considerations: the sales ability of the • Exclusive or Non-exclusive invention, you probably don’t • Territory want to sell it anyway. • Royalties • Accounting Period • Audit Rights • Ending, Renewal, and Termination of the License
  • 39. Prior Art Search -> Is it worth filing for a Utility Patent? Yes -> Get “patent pending” (Utility or Provisional), then try to sell or license. No -> Will patent laws change? Worth a Hail Mary application to get patent pending status for a few years? In any case -> Would a Design Patent be useful? In any case -> Trademarks and Copyrights.
  • 40. Design, Manufacture, Deliver TM Prototyping your IdeasAn overview of the first steps for commercializing your product idea Leardon Solutions PO Box 28564 San Diego, CA 92198-0564 www.leardon.com
  • 41. Design Specialty Expected Time* Expected Cost* Prototype Use for Prototype Detail Fabricator Required Required Design Fabrication Design Fabrication Validation of idea Proof-of-Concept Proof of feasibility 1-2 1-5 No No N/A $200-$2000 Prototype Use for obtaining IP months weeks Show to investors for raising money Show to investors for raising money Work out the design and manufacturing details Integrated Design 1-3 3-5 $1000- Validate functionality and qualify Probably Probably $1500-$3000 Prototype months weeks $2000 design Feedback from distributors, buyers, and retailers Validate functionality and qualify design $3000-$15000 Production Feedback from distributors, buyers, 2-3 2-3 $2000- (includes Yes Yes Prototype and retailers months months $3000 production tools) Obtain customer feedback from beta units* Assumption is a 4 piece metal or plastic mechanical prototype. Certain exceptions apply .
  • 42. Why Create a Prototype? Validation of Idea/Proof of Feasibility: The proof-of-concept prototype bears little resemblance to the actual product and should be used to prove the idea is valid and feasible. Use for Obtaining IP: The proof-of-concept prototype or integrated design prototype can be used in discussions with the patent attorneys to ensure proper communication of functionality. Show to Investors for Raising Money: Use a high-quality prototype in an investor presentation. There is no better investor pitch than one with a product demonstration. Work out Design and Manufacturing Details: Design and engineer the product so that it can be manufactured with quality results at the best price. Validate Functionality and Qualify Design: Put integrated design prototype and production prototype through rigorous qualification tests to verify product will operate properly under all conditions. Feedback from Distributors, Buyers, and Retailers: Take the integrated design prototype and production prototype to targeted sales channels and receive valuable feedback prior to freezing design. Obtain Customer Feedback from Beta Units: Have customers find potential issues and provide useful feedback by using the final production prototypes.
  • 43. Examples of Proof-of-Concept Prototypes Essential Tremors Eating Assistance Beer Tap LockInk-jet printer paper feed Booklet Folding Mechanism Bicycle Shifting Plate Imaging Spot Lens Medical Tourniquet Clinical Diagnostic CaseHigh-speed envelope printer Biological Analysis Chip Holder Eye/Ear Protection
  • 44. Examples of Integrated Design Prototypes Clinical Diagnostic Access Door Precision Spring Clinical Diagnostic Case Active Wear Exercise Belt Medical Diagnostic Equipment Machined Body Panel Imaging Spot Lens Pet Food Bowl Medical Tourniquet Medical Intubation DeviceBicycle Seat Clamps
  • 45. Examples of Production Prototypes Custom Bicycle Head-Tube Badges Pet Food Bowl Grease Fitting Medical Tourniquet Acrylic Golf Putter Logo Keychain Inkjet Printer
  • 46. How to Find a Competent Fabrication Vendor  Outsourcing and Offshoring  Outsourcing: subcontracting a process to a third-party company  Offshoring: relocation of a business process from one country to another  Things to consider when offshoring  Don’t underestimate the difficulty in offshoring a prototype  Entrepreneurs typically don’t have the leverage or economics of scale to approach off-shore manufacturers and get world-class pricing  A thorough understanding of the culture and how to effectively communicate with them are keys for successful offshoring  Relationships are key to the successful of the offshoring project  Don’t blindly search alibaba.com and globalsources.com for vendors
  • 47. How do you make a Prototype?  Stereolithography (SLA)  A laser is used to cure liquid material and generate a part  Parts are great for verifying form and fit but not usually function  Takes about 3 days from release  Cost ranges from $300 to $1000 for medium parts
  • 48. How do you make a Prototype?  Machining  It is possible to machine most plastics and metals  Turnaround times are around 1-3 weeks  Produces parts that can be used to test form, fit, and function  Part cost ranges from $150 for small parts and $6000 for large parts Machined Parts Before Glueing Final Prototype Assembly
  • 49. How do you make a Prototype?  Silicone Molding  Take a machined plastic part and create a silicone mold for producing 15 parts  Costs more than a tooled part but lead-time is much faster  A set of 15 small parts will cost around $1500-$2500
  • 50. Ryan A. Alexeev, Esq. 2141 Palomar Airport Rd., Ste. 320 Carlsbad, CA 92011Tel: (619) 819-5085 / Fax: (619) 353-3401 www.NorthCountyLegal.com
  • 51. Business Plan Entity Formation FBN
  • 52. •Start Selling or •Purpose Providing Your •Strengths Services •Weaknesses •Target Market•Write Your Plan •CompetitorsDown •Investment•Obtain Trademarksor Patents
  • 53. •Sole Proprietorship•Partnership•Corporation•LLC
  • 54. Sole Proprietorship• Can just start doing business – You and the business are one• No need to file anything with the State• Pay taxes under your own social security number• You are personally liablePartnership• Two or more people going into business with each other• No need to file anything with the state if you are operating as a general partnership• Each person pays taxes on their own• Each person is liable for the debts and you may be liable for your partner’s actionsGeneral partners – manage the business and are equally liable for its debtsLimited partners – may invest but not be directly involved in management and are liable onlyto the extent of their investments.Limited Liability Partnership – Usually used by attorneys or accounting firms. Limits thepartner’s liability to the amount he/she invested in the company.
  • 55. Corporations• Business is separate entity from the owners• Requires Articles of Incorporation to be filed with the Secretary of State• Should have your by-laws which state how meetings should be held, whenthey should be held• Minimum franchise tax fee of $800 must be paid each year• Must have an annual meeting and send in statement to the Secretary of Stateevery year stating you are in compliance• The business is liable and not the individuals – Of course there areexceptions to these rulesLimited Liability Corporation• Owners and managers have limited liability• For tax purposes • 1 owner is taxed as sole proprietorship • More than 1 owner is taxed as partnership• May be owned by individuals or business entities• Formation is simpler and faster than forming and maintaining a corporation• Formal oral or written operating agreement must be entered into• Minimum tax of $800/year• Articles of Organization must be filed with Secretary of State
  • 56.  File with County of San Diego San Diego El Cajon Kearney Mesa San Marcos Chula Vista Do not use the publication services sent you immediately