Patent FAQ: How Can Technology Entrepreneurs Avoid USPTO Backlog Using Accelerated Examination?

Sadly, inventors and entrepreneurs are faced with a big hurdle when it comes to forming intellectual property rights needed to support technology based startup businesses. According to data from the US Patent Office (USPTO), the current backlog of patent applications is over 1,200,000 with more than 700,000 not having received a first Office Action, meaning your application is still in the pile. The total time to get a patent is reported by USPTO to average 34 months (i.e. pendency). However, this number is an average that does not reflect the longer pendency typically experienced by emerging technologies where the number of applications is rapidly increasing. If you're CEO of a company in a high-growth tech sector and plan to introduce new products based on the invention within 1 to 2 years, the prospect of a patent being issued 4 or 5 years after filing is almost irrelevant; unless you are trying to raise capital.

The 2008 Berkeley Patent Survey, a national study of patents and entrepreneurship, reported that 75% of the executives at venture capital-backed startups consider patents to be an essential factor in their financing decisions. Investors are very aware that less than half of the applications filed result in an issued patent. An indeterminate outcome for 4 or 5 years can represent a big road block to venture funding. In rapidly emerging technology sectors having a patent in hand may make the difference in getting funded or not.

What to do. Accelerated patent examination, available through the US Patent and Trademark Office, can be an excellent solution if prosecuted correctly. It provides an opportunity to secure patent protection, usually in much less time as the normal process. Until now, there was significant uncertainty regarding meeting rather stringent requirements to qualify. You would not know going in if accelerated examination would be approved, even though significant expense had been incurred attempting to comply with USPTO requirements.

The USPTO is now moving forward with implementation of Track 1 of a new three track patent processing program that will guarantee accelerated examination. Track 1 of this program will allow the applicant to pay a higher fee and receive faster examination. The fee is set at $4,000, but the USPTO may receive Congressional approval to allow for a 50% discount for small entities. The patent application must be an original utility or plant patent application. The number of independent claims is limited to four, with 30 total claims. The application can only be filed through the USPTO's electronic filing system. The application will receive special status throughout its entire course of prosecution. The goal is to get final disposition within 12 months. That does not mean you are guaranteed a patent, but you will have an answer sooner rather than later. If you need a patent to support raising venture capital, then the new Track 1 process may be the right choice. But act fast. Only 10,000 applications will receive Track 1 processing the first year.

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Legal Considerations for Raising Capital

NOTE: THIS IS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE.

There are numerous legal considerations every entrepreneur must face when starting a new business, and raising startup capital is one that can be fraught with danger. Hiring a qualified securities attorney is not a luxury; it's a necessity for businesses seeking to raise capital from third parties. Some of the key general considerations are:

o Properly organizing the company as business entity under state law;

o Ensuring the company has issued enough authorized shares of stock of the same type that will be offered to investors;

o Make sure that any existing and potential legal problems are resolved before issuing stock to investors;

o Have an experienced securities attorney examine the federal securities laws, as well as the securities laws of any state in which stock may be offered to prospective investors, to make sure the company and its investment offer complies with those laws;

o Have your attorney explain in writing the potential personal liabilities of the company's officers and directors if the company violates any federal or state securities laws in raising capital. Potential penalties can be very serious, ranging from civil fines to jail time;

o Make sure that your written investment prospectus contains all required state and federal disclosure language in the appropriate places;

o Your attorney should review the business plan and financial statements for possible untrue and/or misleading statements; and

o Obtain a written opinion from your attorney whether your particular investment opportunity is required to be registered with the appropriate regulatory agencies.

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Extending Consumer Credit Requires Compliance With Federal Laws

It is important for any prospective business purchaser to perform due diligence in researching a potential target business. Some of the documents you will need to collect and review in your analysis of whether a particular business would be a good acquisition include the following types of documents.

NOTE: THIS IS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE.

1. Corporate and Organizational

o Certified copy of articles of incorporation and bylaws of company and subsidiaries as currently in effect;

o Partnership agreement and any amendments thereto;

o A copy of the most current organization chart available of the company;

o A list of states and foreign countries (if any) in which the Company is qualified to do business; and

o All names under which the company has done business in the past five years; this includes registered and unregistered trademarks, fictitious name statements (commonly referred to as "d/b/a filings").

2. Financing Documents

o All loan agreements, debt instruments, and other financing instruments, and all related material documentation, to which the company is a party.

o A list of all mortgages, liens, pledges, security interests, charges, or other encumbrances to which any property (real or personal) of the company is subject and all related material documentation;

o Schedule of all short-term and long-term debt (including capitalized leases, guarantees, and other contingent obligations).

3. Financial Statements

o All audited and un-audited financial statements;

o Brief description of contingent liabilities involving the Company, such as pending lawsuits and threatened litigation;

o Name of accountants and length of relationship with accountants; indicate whether the accountants own any interest in or hold any position with the Company or its subsidiaries;

o Budgets, business plans or projections (for the Company and any of its subsidiaries) made on a quarterly, annual or other basis during the past 3 fiscal years.

4. Contracts & Leases

o Real estate leases. Consider the term of the lease and the quality and location of the space and decide whether your business needs would be satisfied;

o Equipment leases;

o Purchase and sale contracts for goods and services [uniforms; food suppliers]

5. Tax Matters

o Are back taxes owed?

o Are there any pending tax suits?

o Does any local, state or federal taxing authority have any liens against the real property or business personal property you would be acquiring? If so penalties, interest and attorney's fees could greatly increase the cost of satisfying the tax lien.

6. Identities of All Directors, Officers & Shareolders

o You ought to perform a background check on each of these people to see whether there is any pending litigation against them.

7. Owned Real Estate

o Need a list of owned real estate to help in valuing the business and determining liabilities.

8. Insurance

o You would want to have copies of the insurance policies, as well as the name and contact information for the insurance agent, going back four years from the time of purchasing the business. Check to see whether the insurance policies would cover you, as the new company, for any damages alleged to have occurred before you acquired the business.

Finally, many other factors related to financial and other matters must be considered before taking the plunge.

Electronic Evidence as the Smoking Gun   Legal Considerations for Raising Capital   Legal Considerations for Raising Capital   Legal Considerations for Raising Capital   

Electronic Evidence as the Smoking Gun

NOTE: THIS IS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE.

Electronic communications--particularly email--may contain a treasure trove of evidence in commercial litigation matters. There are three key reasons for this fact. First, email is a very informal means of communication. Why? I don't know, it just is. Though I personally insist on specific grammar and sentence structure in my "hardcopy" written correspondence, court pleadings, etc., in emails I sometimes choose not to follow the rules of written English.

Second, though intellectually many of us know it is not, email "feels" anonymous. I'm sure there have been studies conducted in effort to understand why email feels anonymous. Maybe it's because of the instantaneous nature of email--you can simply vent your emotions and knee-jerk reactions immediately and press the send button, rather than having time to reflect on your written thoughts as you otherwise would if you were forced to sit down and write a letter; sign it with your own hand; put it in an envelope; put a stamp on in it; and take it to the mailbox and mail it. Whatever the reason(s), the fact of the matter is that email does feel anonymous.

The third reason email evidence can contain critical evidence in a commercial litigation case: permanence and retrievability. Most people don't realize that when they "delete" an email from their email program it actually remains on the computer or network unless and until the portions of the computer's memory containing the email are overwritten by other information. You can be certain, however, that every single electronic commuincation you make--email or otherwise--is being recorded somewhere. Perhaps on your company's network server, perhaps at your Internet service provider, or perhaps on your own computer's hard drive. Savvy litigators know this fact and, depending the stakes of the case, you could end up receiving a letter such as this should your business find itself in a business dispute:

Dear Mr. John Doe:

This is a notice and demand that evidence identified below in paragraphs 2 through 5 must be immediately preserved and retained by you until further written notice from the undersigned. This request is essential, as a paper printout of text contained in a computer file does not completely reflect all information contained within the electronic file.

The continued operation of the computer systems identified herein will likely result in the destruction of relevant evidence due to the fact that electronic evidence can be easily altered, deleted or otherwise modified. THE FAILURE TO PRESERVE AND RETAIN THE ELECTRONIC DATA OUTLINED IN THIS NOTICE CONSTITUTES SPOLIATION OF EVIDENCE AND WILL SUBJECT YOU TO LEGAL CLAIMS FOR DAMAGES AND/OR EVIDENTIARY AND MONETARY SANCTIONS.

For purposes of this notice, "Electronic Data" shall include, but not be limited to, all text files (including word processing documents), spread sheets, e-mail files and information concerning e-mail (including logs of e-mail history and usage, header information and "deleted" files), Internet history files and preferences, graphical image format ("GIF") files, all other graphical format images, data bases, calendar and scheduling information, computer system activity logs, and all file fragments and backup files containing Electronic Data.

1. Please preserve and retain all Electronic Data generated or received by the following persons:

John Doe, CEO

Mary Smith, CFO

Bill Brown, COO

2. Please preserve and retain all Electronic Data containing any information about the following subjects:

Emails sent to or received from any employee or representative of ABC Company, DEF Company, or XYZ Company.

3. You must refrain from operating (or removing or altering fixed or external drives and media attached thereto) standalone personal computers, network workstations, notebook and/or laptop computers operated by the following persons:

John Doe, CEO

Mary Smith, CFO

Bill Brown, COO

4. You must retain and preserve all backup tapes or other storage media, whether on-line or off-line, and refrain from overwriting or deleting information contained thereon, which may contain Electronic Data identified in paragraphs 2 through 4.

In order to alleviate any burden upon you, we are prepared to immediately enlist the services of a computer forensic expert to image and examine all drives and media in your custody and control which may contain Electronic Data relevant to this matter. If you enlist your own computer forensics expert to generate evidentiary images of all electronic evidence identified above, demand is made that such expert utilize industry standard computer forensic software in order to facilitate and enable the processing and exchange of such evidence in this matter.

Should your company receive a letter like this, you should take it extremely seriously. Continuing to use any computers or other devices identified in such a letter will result in data being overwritten, which the courts would interpret as destruction of evidence. Destroying evidence can not only result in serious sanctions against the company or individual in the case at hand, as we saw during the Enron mess it can also result in criminal prosecution.

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Legal Considerations for Raising Capital

NOTE: THIS IS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE.

There are numerous legal considerations every entrepreneur must face when starting a new business, and raising startup capital is one that can be fraught with danger. Hiring a qualified securities attorney is not a luxury; it's a necessity for businesses seeking to raise capital from third parties. Some of the key general considerations are:

o Properly organizing the company as business entity under state law;

o Ensuring the company has issued enough authorized shares of stock of the same type that will be offered to investors;

o Make sure that any existing and potential legal problems are resolved before issuing stock to investors;

o Have an experienced securities attorney examine the federal securities laws, as well as the securities laws of any state in which stock may be offered to prospective investors, to make sure the company and its investment offer complies with those laws;

o Have your attorney explain in writing the potential personal liabilities of the company's officers and directors if the company violates any federal or state securities laws in raising capital. Potential penalties can be very serious, ranging from civil fines to jail time;

o Make sure that your written investment prospectus contains all required state and federal disclosure language in the appropriate places;

o Your attorney should review the business plan and financial statements for possible untrue and/or misleading statements; and

o Obtain a written opinion from your attorney whether your particular investment opportunity is required to be registered with the appropriate regulatory agencies.

Electronic Evidence as the Smoking Gun   Legal Considerations for Raising Capital   Legal Considerations for Raising Capital   Legal Considerations for Raising Capital   

Electronic Evidence as the Smoking Gun

NOTE: THIS IS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE.

Electronic communications--particularly email--may contain a treasure trove of evidence in commercial litigation matters. There are three key reasons for this fact. First, email is a very informal means of communication. Why? I don't know, it just is. Though I personally insist on specific grammar and sentence structure in my "hardcopy" written correspondence, court pleadings, etc., in emails I sometimes choose not to follow the rules of written English.

Second, though intellectually many of us know it is not, email "feels" anonymous. I'm sure there have been studies conducted in effort to understand why email feels anonymous. Maybe it's because of the instantaneous nature of email--you can simply vent your emotions and knee-jerk reactions immediately and press the send button, rather than having time to reflect on your written thoughts as you otherwise would if you were forced to sit down and write a letter; sign it with your own hand; put it in an envelope; put a stamp on in it; and take it to the mailbox and mail it. Whatever the reason(s), the fact of the matter is that email does feel anonymous.

The third reason email evidence can contain critical evidence in a commercial litigation case: permanence and retrievability. Most people don't realize that when they "delete" an email from their email program it actually remains on the computer or network unless and until the portions of the computer's memory containing the email are overwritten by other information. You can be certain, however, that every single electronic commuincation you make--email or otherwise--is being recorded somewhere. Perhaps on your company's network server, perhaps at your Internet service provider, or perhaps on your own computer's hard drive. Savvy litigators know this fact and, depending the stakes of the case, you could end up receiving a letter such as this should your business find itself in a business dispute:

Dear Mr. John Doe:

This is a notice and demand that evidence identified below in paragraphs 2 through 5 must be immediately preserved and retained by you until further written notice from the undersigned. This request is essential, as a paper printout of text contained in a computer file does not completely reflect all information contained within the electronic file.

The continued operation of the computer systems identified herein will likely result in the destruction of relevant evidence due to the fact that electronic evidence can be easily altered, deleted or otherwise modified. THE FAILURE TO PRESERVE AND RETAIN THE ELECTRONIC DATA OUTLINED IN THIS NOTICE CONSTITUTES SPOLIATION OF EVIDENCE AND WILL SUBJECT YOU TO LEGAL CLAIMS FOR DAMAGES AND/OR EVIDENTIARY AND MONETARY SANCTIONS.

For purposes of this notice, "Electronic Data" shall include, but not be limited to, all text files (including word processing documents), spread sheets, e-mail files and information concerning e-mail (including logs of e-mail history and usage, header information and "deleted" files), Internet history files and preferences, graphical image format ("GIF") files, all other graphical format images, data bases, calendar and scheduling information, computer system activity logs, and all file fragments and backup files containing Electronic Data.

1. Please preserve and retain all Electronic Data generated or received by the following persons:

John Doe, CEO

Mary Smith, CFO

Bill Brown, COO

2. Please preserve and retain all Electronic Data containing any information about the following subjects:

Emails sent to or received from any employee or representative of ABC Company, DEF Company, or XYZ Company.

3. You must refrain from operating (or removing or altering fixed or external drives and media attached thereto) standalone personal computers, network workstations, notebook and/or laptop computers operated by the following persons:

John Doe, CEO

Mary Smith, CFO

Bill Brown, COO

4. You must retain and preserve all backup tapes or other storage media, whether on-line or off-line, and refrain from overwriting or deleting information contained thereon, which may contain Electronic Data identified in paragraphs 2 through 4.

In order to alleviate any burden upon you, we are prepared to immediately enlist the services of a computer forensic expert to image and examine all drives and media in your custody and control which may contain Electronic Data relevant to this matter. If you enlist your own computer forensics expert to generate evidentiary images of all electronic evidence identified above, demand is made that such expert utilize industry standard computer forensic software in order to facilitate and enable the processing and exchange of such evidence in this matter.

Should your company receive a letter like this, you should take it extremely seriously. Continuing to use any computers or other devices identified in such a letter will result in data being overwritten, which the courts would interpret as destruction of evidence. Destroying evidence can not only result in serious sanctions against the company or individual in the case at hand, as we saw during the Enron mess it can also result in criminal prosecution.

Electronic Evidence as the Smoking Gun   Legal Considerations for Raising Capital   Legal Considerations for Raising Capital   Legal Considerations for Raising Capital