|
This newsletter is for the benefit of: our customers both current and past, our workers , board members and friends including those of you we haven't talked to recently. Please feel free to forward to others who might be interested in our activities
|
Patents and Business Succession*
I recently had occasion to participate in a panel discussion on business succession planning. The five panelists were each responsible for one topic.My topic was Intellectual Property.
The Chair asked me to answer three questions in my opening statement:
- Does someone's IP have value after they die?
- How can one protect the value?
- Can others (partners) continue to use the IP is something happens to the IP owner?
The answer to all 3 questions is Yes. A patent on an invention is a piece of property as much as a deed to a house is. The patent passes through the probate process the same as any other property. However there are some important wrinkles that are peculiar to patents. One is that the inventor named on the patent is not necessarily the owner. The patent is owned by the Assignee who is named in an assignment document.
If there is no assignment document all inventors own the patent and any one of them can sell or license it without permission of the others. (35 USC262) This important point was a surprise to me. It makes one thing very clear. An inventor should execute an assignment document as soon as a patent is approved so that ownership rights match intentions.
In more murky areas are patents that are in process. Either not yet filed or filed and not yet approved. In the case of a patent that is filed but not issued (prosecution phase), a legal representative of the inventor may make the appropriate oath or declaration and receive the patent if issued (37 CFR 1.42)
If the patent is not yet filed, legal representatives may make application for the patent (35 USC 117).
If you need to learn more about patent ownership or any other topic please contact us. You can find contact information and lots of other useful stuff on our main website www.bmllc.net or our patent site
* Many thanks to Tracy Jong for supplying the legal references for the panel and this article.
|
Is it Sale, License or Option?
selling your patent rights
Often inventors neither have the interest nor the capability to commercialize their invention themselves. In such cases the inventor often looks around for someone to buy out their patent rights. This is a lot more difficult than it might seem at the outset. Its one of the reasons that patent brokers like ITTr are in business.
Its quite difficult to find the right company and then the right person at that company to buy or license a piece of technology unless it is a close to perfect fit to the target companies existing business.
That is why ITTr developed our special ICF process for finding and connecting to potential buyers. But even when an interested party is found. Its still necessary to make a deal with them and that means agreeing not on just a price but also on terms and conditions of the sale.
The simplest deal is an outright sale. The inventor signs over all rights to the buyer for an agreed upon price.
A license is more complex but offers different advantages. It usually has 3 driving numbers, a down payment, an annual fee and a royalty rate. One example showing the advantage of a license is the inventor who sold his idea for $10000.
The purchaser went on to commercialize it and earn $320 Million.
If the inventor had licensed with a $5000 downpayment and $1000 annual fee he would have earned his $10000 in 5 years if no product was made or revenues earned. More importantly he would have collected $16 Million in royalty earnings from a 5% royalty,on the $320M. Clearly a far better deal.
The third method is an option. If a buyer is not sure that they want to buy they may purchase a 90 day option at , for example 20% of the purchase price. The option price is subtracted from the selling price if the buyer decides to purchase. This gives the buyer a chance to see if the invention will fit with his/her business without paying the full price.
If you want to know more about our ICF process logon to the ITTr website at www.ittrifecta.com
|
|
First Look AlaCarte
 Penguin sells a report which is a shortened version of a traditional due diligence report. Such reports are often requested when some one wants to research a company for possible merger or acquisition. A full due diligence report can have over 130 different information line items. Our First Look reports are an abridged version of such a report with around 80 line items. We often say that First Look provides 80% of the value at 20% of the cost of a standard report.
Now Penguin has decided to take that approach still further. We are preparing to offer customers a selection of some of the line items from First Look. For example a customer may just want to see the previous years balance sheet. Or a list of the officers of the company.
We are dividing the full list into groupings available at different prices (since some items are more expensive to prepare than others).
We expect to have the new menu available in the near future but there is no need to wait. If as customer is interested we can supply a list of the line items. They can select their choices and we will give them a quote. Just go to the Rochester Penguin Group website and look up our contact information and send us a note. |
