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Author Topic: How To Discuss Business While Patent Pending  (Read 564 times)

DavidAQT

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How To Discuss Business While Patent Pending
« on: 09-19-17 at 02:50 pm »

I recently filed a non-provisional utility patent application and have confirmed that I am fast-tracked as a micro-entity. I'm confident that I will obtain a patent, but don't know how how narrow the scope will be from my original application.

My invention would most likely be considered an improvement of a consumer product good. Therefore, a less efficient product is currently being produced by many manufacturers in the US and abroad. Several of these manufacturers also sell the product components individually as well as offer to manufacture the product on a private-label basis. It would require less up-front capital if I completely outsource the manufacturing until I get enough revenue to bring some manufacturing in-house. On the flip side, I would have to totally reveal my invention to these contract manufacturers which puts my IP at risk.

I want to start talking to these suppliers (some US-based, some based in Asia), but am deathly afraid of my invention being copied and not having the financial resources to afford patent litigation. It would seem obvious that the safest option would be to wait for the patent to issue, but I'd like to understand how much risk is involved if I start talking to them now.

1) Practically speaking, how well am I protected if I obtain a NDA prior to discussion with any supplier?
2) Is there a way of checking the integrity of these firms prior to contacting them?
3) I assume that the same caveats exist whether I contact these manufacturing firms to be a supplier or to possible license my invention. True, or other things to consider?
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midwestengineer

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Re: How To Discuss Business While Patent Pending
« Reply #1 on: 09-20-17 at 06:35 pm »

I recently filed a non-provisional utility patent application and have confirmed that I am fast-tracked as a micro-entity. I'm confident that I will obtain a patent, but don't know how how narrow the scope will be from my original application.

My invention would most likely be considered an improvement of a consumer product good. Therefore, a less efficient product is currently being produced by many manufacturers in the US and abroad. Several of these manufacturers also sell the product components individually as well as offer to manufacture the product on a private-label basis. It would require less up-front capital if I completely outsource the manufacturing until I get enough revenue to bring some manufacturing in-house. On the flip side, I would have to totally reveal my invention to these contract manufacturers which puts my IP at risk.

I want to start talking to these suppliers (some US-based, some based in Asia), but am deathly afraid of my invention being copied and not having the financial resources to afford patent litigation. It would seem obvious that the safest option would be to wait for the patent to issue, but I'd like to understand how much risk is involved if I start talking to them now.

1) Practically speaking, how well am I protected if I obtain a NDA prior to discussion with any supplier?
2) Is there a way of checking the integrity of these firms prior to contacting them?
3) I assume that the same caveats exist whether I contact these manufacturing firms to be a supplier or to possible license my invention. True, or other things to consider?

This is well outside the scope of the general advice that can be given here.  You will need to hire counsel.
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DavidAQT

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Re: How To Discuss Business While Patent Pending
« Reply #2 on: 09-20-17 at 08:37 pm »

"Outside the general scope..."  Really?

All I am "generally" asking is:

1) Is a non-disclosure agreement only as powerful as the financial resources to litigate it?
2) Supposedly there is database called Nexxus-Lexis that will allow one to search for litigation against a firm. Is that true? Or is there something else?
3) Is there any difference between discussing IP for licensing purposes vs. discussing IP for contract manufacturing?

FYI, I expect to hire counsel. I'm only trying to get a "general" idea whether counsel is needed sooner or later.
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still_learnin

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Re: How To Discuss Business While Patent Pending
« Reply #3 on: 09-21-17 at 10:49 am »

"Outside the general scope..."  Really?

All I am "generally" asking is:

1) Is a non-disclosure agreement only as powerful as the financial resources to litigate it?
2) Supposedly there is database called Nexxus-Lexis that will allow one to search for litigation against a firm. Is that true? Or is there something else?
3) Is there any difference between discussing IP for licensing purposes vs. discussing IP for contract manufacturing?


This is not legal advice, only general information about the court system and research tools.

2) Supposedly there is database called Nexxus-Lexis that will allow one to search for litigation against a firm. Is that true? Or is there something else?

I'm assuming by "firm" you mean "company," rather than "law firm." (The phrase often has this more specialized meaning to attorneys.)

Lexis is good place to start looking. It's a huge company with a wide variety of products, including some general (not legal-specific) tools for researching companies. I'm not a litigator -- many of us here on this forum focus on patent prosecution not litigation -- so I'm not up to date on all the research tools. But an internet search should turn up quite a bit of info about offerings by Lexis, it's competitors, or even some free services with more limited capabilities.

I note that tools from commercial providers like Lexis are expensive, though perhaps there are free trial offers you can take advantage of.

1) Is a non-disclosure agreement only as powerful as the financial resources to litigate it?

I'd say that's a good way to put it.

The legal system is built on addressing problems after the fact. Contracts don't force a company or person to do anything, merely provide a remedy when a party to the contract doesn't live up to its obligations. And the structure of the US legal system means that going to court for a contract matter -- or even talking to a lawyer about the possibility of going to court -- will cost the injured party money.
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The above is not legal advice, and my participation in discussions on this forum does not create an attorney-client relationship.

MYK

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Re: How To Discuss Business While Patent Pending
« Reply #4 on: 09-21-17 at 02:52 pm »

I want to start talking to these suppliers (some US-based, some based in Asia), but am deathly afraid of my invention being copied and not having the financial resources to afford patent litigation.
Just to point out the obvious, if you are based in the U.S. and your supplier is based, say, in China, and your only patent is in the U.S., then good luck enforcing an English-language NDA against a supplier in China when the supplier takes your design and starts producing three shifts of product for sale everywhere else in the world.  Your U.S. patent rights don't cover manufacture in China and sale in Europe, and (if I recall correctly what's been written on Dan Harris's chinalawblog.com) China won't enforce a foreign judgment against a Chinese corporation when the contract was written in English.  I could be mistaken about that;  it's been a while since I spent much time reading there.  Even if I am, though, international litigation is ridiculously expensive.

At a minimum, you will want to file applications, and hopefully get patents, in all countries in which your core suppliers are located.  You'll want to look into whether arbitration awards or foreign judgments are enforceable in their countries, and if so under what circumstances.  In some countries you need specific language stating that those who have signed have the authority to bind their companies, and you need to ensure that they hold positions that are legally allowed to do so -- director level, C-level, or equivalent.
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"The life of a patent solicitor has always been a hard one."  Judge Giles Rich, Application of Ruschig, 379 F.2d 990.

Disclaimer: not only am I not a lawyer, I'm not your lawyer.  Therefore, this does not constitute legal advice.

midwestengineer

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Re: How To Discuss Business While Patent Pending
« Reply #5 on: 09-25-17 at 11:06 am »

"Outside the general scope..."  Really?

All I am "generally" asking is:

1) Is a non-disclosure agreement only as powerful as the financial resources to litigate it?
2) Supposedly there is database called Nexxus-Lexis that will allow one to search for litigation against a firm. Is that true? Or is there something else?
3) Is there any difference between discussing IP for licensing purposes vs. discussing IP for contract manufacturing?

FYI, I expect to hire counsel. I'm only trying to get a "general" idea whether counsel is needed sooner or later.

You are asking questions regarding transactions spanning international boarders.  The number of bodies of law that impact the answer to these questions is very large.  The answer to any of them could be yes, no, or maybe depending on how you proceed. 

Generally, you are trying to figure out if you can protect your future sales in the US while manufacturing abroad by leveraging intellectual property.  Can this be done? Yes.  What is the level of difficulty to execute this business strategy?  Expert level.  Why is it so difficult?  Any miss step will cost a fortune to fix.
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