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I have an Invention ... Now What?
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   Patent Pending Rights
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Jay_SoCal
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Patent Pending Rights
« on: Apr 17th, 2006, 5:43pm »
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I have been working on and have developed a new product.  It's new, novel and based on my research no one has anything like it patented or in the marketplace.  I plan on filing a Provisional Patent App while I finalize my product. Then, I plan on filing a utility and/or a design patent within a year.  
 
I want to launch my product in June of this year but am afraid that my strongest competitor will reverse engineer my product then sell it through their already established distribution channels leaving me having done all the work but not receiving any financial reward.  
 
With that said my questions are:
 
1.  Generally speaking, does the “Patent Pending” status normally prevent a competitor from copying my product and then bringing their own version to market?
2.  What rights do I have against a company that does manufacture and sell their version of my product, having only a “Pat Pending” status?
3.  Does this happen frequently or am I being paranoid?
 
Thank so much in advance for your help!
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HemantGupta
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Re: Patent Pending Rights
« Reply #1 on: Apr 17th, 2006, 9:07pm »
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Congratulations on your new product!
 
 The "Patent Pending" status doesn't prevent anyone from infringing, but it does pave the way for you to sue them later for reasonable royalties after your patent issues.  
 
The way this works is at 18 months after your filing date, the patent will publish, and you will be entitled to reasonable royalties between the publication date and the and the issue date but only if 2 conditions are true:  
1)  the infringer had to have actual notice of the published application : this can be done in  the form of "patent pending" followed by the patent number.
2) the claims in the issued patent are substantially identical to the way they were when the application was published.
 
Each patent is different, so no one could predict how often it happens, but it is good to have to show that the infringer had actual notice.
 
You should note that your provisional patent application won't give you the priority of an earlier filing date to a design application.  It only helps plant and utility patents.
 
Good luck.
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Hemant Gupta
Attorney from TN
JSonnabend
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Re: Patent Pending Rights
« Reply #2 on: Apr 18th, 2006, 7:44am »
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I'll add the following to Hermant's excellent answer.
 
Depending on the nature of your product and the market in which it operates, "patent pending" may provide significant protection after you launch, practically speaking, or it may provide effectively none.  
 
In cases where the product at issue is likely to have a short lifespan (short "legs", as they say), patent pending is nearly worthless.  In such situations, by the time your patent issues, product demand may have already run its course.  I was involved indirectly with the "Topsy Tail" patent in the early 90's, and that's a good case in point.
 
In cases where the product may have a longer life, and start-up costs for product production are sufficiently high, then patent pending may be enough to keep competitors out, as they won't want to invest in production knowing they may not have sufficient time to recoup their initial investment.
 
Finally, in cases where the product may have a long life but startup costs are low (e.g., for some software products), competitors might jump in during the "patent pending" period knowing they'll have to stop or pay royalties later.  This may not be a bad thing for you, as you may find an instant royalty revenue stream upon issuance of your patent (loosely speaking).
 
That's my spin on the issue in a nutshell.  The actual analysis is a bit more complex, but it should give you another angle on things.
 
- Jeff
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SonnabendLaw
Intellectual Property and Technology Law
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JSonnabend@SonnabendLaw.com
Jay_SoCal
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Re: Patent Pending Rights
« Reply #3 on: Apr 18th, 2006, 9:54am »
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Thank you HermantGupta and JSonnabend!  Your answers have helped me gain a better understanding of my situation.
 
Unfortunately, I feel that my product will have short legs based on my research and knowledge of the industry.  A question though, do you think that there might be a "creative" way around this?
 
For example, if I approach my greatest threat (company A) and I have them sign an NDA or I sign their NDA my product is still considered a trade secret, correct?  Thus, when I launch my product into the marketplace and they copy it would I have some type of recourse say as a breach of contract or diclosure of trade secret?
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JimIvey
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Re: Patent Pending Rights
« Reply #4 on: Apr 20th, 2006, 8:46am »
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The short answer is "Yes."  There are two qualifications that you should be aware of.
 
First, if you sign their NDA, it's possible that it's not an NDA at all but rather just a DA (Disclosure Agreement) in which you waive all confidentiality.  Read their NDA very carefully.
 
Second, once your product is on the market, no more trade secret protection.  You only have trade secret protection as long as your idea is kept secret.  Once it hits the shelves, no more secret -- unless it's something that cannot be discovered by examining the product itself.
 
You might be able to have "them" sign an NDA in which they also agree not to compete with you even if the secret gets out.  I say "might" because I don't do this type of work and I'm not sure.  Some states have policies against non-compete clauses, but typically in employment contracts.  You might have the non-compete have a reasonable term -- a year or so -- to just prevent "them" from taking any shortcuts that wouldn't have been known by them without your confidential information, trying to put them on equal footing with other market participants.  Thus, you would preserve you market lead time.
 
Regards.
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James D. Ivey
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