Lately inventors are receiving misinformation about what a Provisional Patent is and how it should be used.  Some of the misinformation can cause inventors serious problems that may not be fixable.  Good invention ideas could be lost.

Back in early 2010, your Invention Guru tried to warn inventors about the misuse of a Provisional Patent Application with the Blog revisited below.  New updated information has been added.

There are some misunderstandings relating to a Provisional Patent. It is often misused by inventors, television hucksters and misguided invention companies. To help bring a little clarity to this topic, I consulted with my son Robert, a Licensed Patent Practitioner and President of Montgomery Patent & Design.

Misunderstanding #1: I have a Provisional Patent.

Provisional Patents do not exist. It is actually a Provisional Patent “application” establishing priority rights which could be continued within one year into a Utility Patent application.

Misunderstanding #2: Receiving an Official Filing Receipt from the Patent Office means that I have a patent and no one can steal my idea or sell anything like it.

This is not true. Although a provisional application receives an official filing date from the Patent Office, the Filing Receipt does not bestow patent rights. A provisional application will not be searched or examined, it will never become a patent unless converted to a utility application that issues, it will automatically expire in one year, the application can not be renewed or re-filed, no patent certificate is issued by the Patent Office, you cannot legally stop anyone from selling a similar product, and the Patent Office’s “Reference Number” is not a Patent Number.

There is a lot more to discuss about Provisional Patent Applications, but correcting these two major misconceptions is a good start.

Updated Information:

Update #1:          A Provisional Patent Application provides a “priority date” for only what is covered properly in the application.  Changes made to the invention following the provisional filing but in a continuing Utility Patent Application generally receive the later date when the utility is filed.

Update #2:          A properly prepared and filed Provisional Patent Application needs to include as many specifics as possible and a competent make and use of engineering specification.  For example, the following specification is not satisfactory: “My invention is a locating device for remote controls, car keys, baby bottles or whatever that by pressing a central button a GPS screen will take me to the lost article that is also beeping.”

Update #3:          A Provisional Patent Application prepared by the inventor, or by a non-license Patent Attorney/ Agent will, except in the arrest of cases, to be worthless and could potentially put invention rights at risk.

Update #4:          Companies will virtually never negotiate the purchase or license of an invention that was filed by anyone that is not licensed by the Patent Office to practice patent law.

Update #5:          Provisional Patent Applications are fine to file while the inventor works out some final details or performs testing.

Update #6:          Avoid, or at least be extremely cautious, about anyone offering to file a provisional for a bargain price.  A bargain price is anything under a $1000.00, and even that can be too low for most inventions.  Buyer Beware!

A Blog from back in August 2010 is worth a revisit today and is reprinted below.  Working with inventors as your Invention Guru does everyday, there definitely appears to be a growing disconnect between an “idea” and an actual “invention.”  Turning a stone into a diamond or lead into gold are ancient “ideas” that no one could ever accomplish. The “doing” is the invention.

Many inventors, seemingly in a rush to file a Provisional Patent Application, make their efforts worthless by merely stating what their idea is without technically explaining how to make their invention work.  Just today, one inventor told me that their high tech invention was unique because it was universal to any computer running on any operating system but couldn’t explain how they made their invention work universally.

Saying it doesn’t make it so.

… from August 2010

Many people think there is no real difference between having an Idea and having an Invention.  They think that Idea and Invention is one in the same.  The fact is – there is a major difference.  A lot of people have Ideas while very few have Inventions.

An Idea is generally defined as “a formulated thought,” while an Invention is “a device, contrivance, or process originated after study and experiment.”  An Idea is a thought.  An Invention is a device.  An Idea cannot be touched.  An Invention is a physical object.  An Idea does nothing more than stimulate further thought and discussion.  An Invention performs a task.  Ideas are therefore not Inventions, but an Idea needs to exist before there can be an Invention.

One particularly popular Idea that I review almost daily is a Locating System.  Hopeful inventors submit their invention idea for finding a lost remote control, or lost car keys, or a lost pacifier, or even lost children.  They propose attaching a miniature transceiver to an item, that when lost, permits a person to simply depress a centrally located button that will wirelessly locate the lost article.  It’s a great idea with a large potential market.  Everyone has lost something in the sofa cushions, or in an old coat, or wherever, and went crazy trying to find it.

In our Locating System example, the Idea is to locate lost personal items wirelessly by depressing a central button.  Losing personal items in the house is a problem that the inventor observed for which an Idea for a possible solution was formulated.  That’s the beginning of most every Invention. The Idea gets closer to being an Invention when the inventor describes using a transceiver attached to an item that can wirelessly communicate with a centralized station.  But it only becomes a real Invention, when the inventor can take the Idea and compose an engineering specification showing how a product can be made along with an electrical/electronic schematic.  Of course, everyone is not an engineer and many inventors will need various levels of assistance; but at the very least, the inventor needs to provide some technical direction for degreed engineers to enable an Idea into an Invention.

Brookstone offers in their retail stores and online a Wireless Key Finder.  The retailer describes the product on their website as, “No more misplaced keys–our new wireless key finder locates your lost keys with just the press of a button. Simply press one of the color-coded pager buttons on the compact wireless transmitter, and the matching key fob will answer with a loud, clear alarm from anywhere in your home.”  Brookstone has turned the Idea of a system for finding lost items into an Invention that can be purchased and used.

Does this mean that no one else can ever invent another lost article finder system?  The answer is “no.”  Every product in every product classification has competition.  There is always room for the “new and improved” version.  To be a real inventor, all you need to do is think of an Idea to improve on the competition, and come up with anInvention that is better.

This blog article is the second one on ABC Television’s prime time hit, Shark Tank.  Your Invention Guru will pull back the show curtains for you to learn some valuable lessons.

Shark Tank gives unknown inventors/entrepreneurs the chance to make their pitch for investment money to five rich people known as Sharks.  The Sharks are from different backgrounds and include: Robert Herjavec, Daymond John, Kevin O’Leary, Mark Cuban and either Barbara Corcoran or Lori Greiner.  All are self-made multi-million or billionaires who will invest their own money if they like the business opportunity.  Brutal honesty and fast-paced negotiations are played out on national television.

Because the Sharks are investing their own money, the deal has to make real business sense. Barbara Corcoran’s philosophy is: “If something solves a big problem and takes a little bit of money to get it out there — these are the businesses that always make money.”  Daymond John has a successful fashion and entertainment background, but will pass on even the best opportunity if the entrepreneurs are not focused and business-like.  Kevin O’Leary is primarily interested in products that he can license to maximize value. Robert Herjavec likes to invest in things he knows something about.  When Lori Greiner replaces Corcoran, she is on the lookout for inventions that fit with her QVC home shopping show.  Finally, Mark Cuban is the most outspoken and the one who seems to have the broadest interest. Just like any investment deal, the Sharks will negotiate hard to get themselves the best deal they can get.

Although Shark Tank, the television show, is mass entertainment looking for ratings, there are valuable lessons for inventors and entrepreneurs to learn:

1. GET YOUR VALUATIONS RIGHT.  Know how much money you need, what you will do with the cash and what percentage you are willing to give up.

It is typical for a Shark to challenge a presenter by saying:  So you want $100,000 for 10% of your business, which means you think your business is worth $1million dollars.  There’s a problem – the numbers don’t work.  Your sales are less than the $100,000 you’re asking for.

Investors deal in the real world where “potential” has very little value.  It is what you have done for me lately.

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2. FEELINGS HAVE NO PLACE IN BUSINESS.

Investing one’s own money in someone else’s business is strictly about making a profit.  Making a pitch saying that this means everything to you and your family means nothing to an investor.  Know exactly how the money will be used to make the investor money.

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3.  THE NUMBERS MUST MAKE SENSE.

It is not a real business unless the numbers work.  Most retail products use a factor of 5 from manufacture to retail.  That means that a product with a realistic $9.95 retail price must be mass produced for $2.00 or less to have a chance in the marketplace.  Mass produced means that the inventor cannot work for free in order to make the numbers work.

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4. KNOW YOUR BUSINESS.

You need to be an expert in your business.  Know everything about it and be capable of answering both the easy and tough questions.  Most importantly: Be able to sell your product yourself and explain how an investor will make their money back with a profit.

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5. HOW IS YOUR INVENTION UNIQUE AND IS IT PROTECTED?

A product that is unique in the marketplace has the best chance for success.  Once the uniqueness is identified, get the proper legal protection, which could be a patent, a trademark or a copyright.  If a patent is the choice, don’t go cheap and rely upon a provisional patent or on any patent that you wrote and filed yourself.

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6.   REEL IN A SHARK WITH A COMPELLING STORY.

If the facts bait the hook, a compelling story can reel a Shark into your boat.  Have your “elevator pitch” ready, all of your facts down cold, and put a pretty bow around it all with a compelling story that will motivate a Shark to invest. An interesting story can set the stage for closing the deal and getting the needed investment money at favorable terms.  There is a popular sales phrase, “facts tell and stories sell.” This was the case for Kevin and Melissa Kiernan who pitched their product The Last Lid to the Sharks.  The product is a replacement fabric lid for garbage cans to keep animals out.  Even though the numbers weren’t exactly perfect, Daymond John made a deal anyway because he bought the story the Kiernans told.

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7.   IT’S NOT A DEAL UNTIL THE MONEY CLEARS THE BANK.

Although Shark Tank television show goes from a new product pitch by an unknown inventor to getting investment capital, or not, in about 15 minutes, what you see on television isn’t always what you get.  There may be smiles and hugs all around, but “due diligence” and transferring money lurks once the cameras stop rolling.  Many investment deals fall apart on Shark Tank as well as in the real world.  Just about anything can derail the train.  There can be differences between inventor and investor, or something was found not be as initially presented, or simple “buyer’s remorse” can be the culprit.  One celebrated case involved Mark Cuban offering $1.25 million dollars up front, plus 7.5% royalties and a 6-figure salary to Jeff Stroope, the inventor of Hyconn, for a 100% interest.  On TV Cuban outbid both O’Leary and Herjavec to get the deal, but something happened on the way to the bank.  Neither Cuban nor Stroope are saying what made the deal go south; however, it is clear that they parted ways without Stroope getting paid.

Shark Tank is Friday night television’s #1 show and must-see-tv for every inventor and entrepreneur.  Airing at 8:00pm ET, the show’s concept gives unknowns in need of venture capital a chance to pitch their new product ideas to five “filthy rich” Sharks who got their money the hard way – they earned it all themselves.

The Sharks listen to the various product presentations, ask questions, negotiate with the inventor as well as against the other Sharks, and in the end, either invest their own money or pass on the opportunity.  Swimming with the Sharks is not for the meek, it can be brutal.

Shark Tank is presently in its third season.  The television show is another hit from Mark Burnett who has perfected the reality TV genre.  The show is an American adaptation of Dragon’s Den, a British television show also seen in Canada.

Both Shark Tank and Dragon’s Den are metaphors for Mark Burnett’s actual life.  Burnett, a young British military vet, arrived in the United States in 1987 with only a couple hundred dollars in his pocket.  Just like the people on his shows, Burnett came to America looking for a chance to cash in on the American Dream.

As Burnett tells it, the chance for anyone from anywhere to make it big is what brings people to the U.S.:  “America is, has always been, and will always remain, the greatest opportunity to people. I’m an American citizen now. I have three American kids. I love this country, and it’s funny that I’m sitting here today, talking about ‘Shark Tank,’ which has the same value system. It’s things like this that drive America– small businesses.”

Who are The Sharks?  The cast of five, self-made multi-million/billionaires, have changed a bit over the years as Sharks rotate in and out.

The three most tenured Sharks are: Robert Herjavec, a first generation immigrant from Yugoslavia who started selling newspapers as a boy and now has a net worth of over $400 million running Canada’s fastest growing technology company; Daymond John was raised as an only child by his mother in the New York City borough of Queens and went on to create a clothing and branding fortune with his FUBU line; and, the last Shark in the core group is Kevin O’Leary, sometimes known as “Mr. Wonderful,” a software entrepreneur who started a company with no money in the basement of his home that he later sold for $3.7 billion.

The 2011-12 television season has seen two women Sharks occupy the same seat at different times.  The two women are: New York City businesswoman Barbara Corcoran who took a $1000.00 loan in 1973 to leave a secure school teaching  job and start a diversified real estate company that she sold in 2001 for $66 million; and Lori Greiner, who has earned the unofficial title of “Queen of QVC” as host of her own shopping network show Clever & Unique that grosses millions of dollars creating and selling hundreds of products and patent holder of 110 United States and International patents.

Rounding out the cast of Sharks is Mark Cuban who is the out-spoken, bigger than life, computer/internet genius and owner of the Dallas Mavericks World Champion Basketball Team.  Cuban has the show’s star power in abundance.  He’s good-looking, confident and not to be denied if there is an investment he wants.  Cuban’s first job after college was selling software from which he was soon fired.  Not to be deterred, he persevered and started AudioNet which evolved into Broadcast.com that he sold in 1999 for $5.9 billion in Yahoo stock.  Today, Mark Cuban is listed as the world’s 459^th richest person.

It is always important to remember while watching Shark Tank that the show is first and foremost an entertainment vehicle for broadcast, prime time television.  Although much of the show is based on business realities, the real world isn’t neatly broken down into success or failure within 15 minute segments.  Real business deals, and real successes, take a great deal of blood, sweat, tears and time.

There are valuable lessons to be learned by watching the television show.  When inventors/entrepreneurs get their shot in the Shark Tank, or with any investor anywhere, they need to quickly be able to:

1. be likable;
2. deliver a confident “elevator pitch”;
3. provide a realistic business valuation;
4. have the right patents, copyrights or trademarks filed;
5. remember your ABCs – “always be closing.”

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If you are a budding inventor or a small business entrepreneur in search of investment capital, you definitely need to program your DVR to record every episode of Shark Tank.  Although the television show is edited for mass viewing appeal, there are a lot of valuable lessons to be learned and critical mistakes to be avoided.

Time to say hello to a new year of great new inventions and products.

As has been the case in years past, the industrial trade show season kicks off with the Consumer Electronics Show (CES) and with the Sports Licensing and Tailgating Show during the week of January 10-15 in Las Vegas, Nevada.  Your Invention Guru was there.  There were big companies, little companies, international companies, and even individual inventors all next to one another reaching for the elusive brass ring.

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Sports Licensing and Tailgating Show

Neil Montgomery at the Sports Licensing and Tailgating Trade Show

January 11-13 the Mandalay Bay Convention Center in Las Vegas hosted the Sports Licensing and Tailgating trade show exhibiting licensed trademarked products to buyers across the country.  Next to the many successful products looking to expand their distribution were hopeful new products from inventors working on a shoestring in search of a licensing deal and a taste of the big leagues.  Everywhere you looked you could see products emblazoned with every NFL® team logo; college logos from the north, south, east and west; the NHL®; MLB®; NBA®; and NASCAR®.  You name it – it was there… and then some.

I spent time at the Putter Around The House™ and Tailgate Golf ™ booth watching buyer after buyer stop by to talk business.  As many of you know, my son Neil is the inventor of these two games while serving as President of Ad-Gen, a business-to-business advertising and product promotional company.  I overheard business discussions regarding where best to get products made, who has the lowest price for full-color display boxes, how United Parcel Service’s 4.9% increase in shipping costs will affect sales, whether the U.S. economy is starting to bounce back or perhaps Europe is truly volatile, what online sales sites can do better than brick and mortar stores, and so on.  You see, there is much more to a successful product than just a good idea.

Sports and racing in America is a growing multi-billion dollar industry with sports licensing becoming a bigger and bigger part of the pie. Tailgating at all sorts of events, including concerts, has exploded into a growth industry of its own.  Inventors in companies, and by themselves in garages, are creating new products to fill the seemingly insatiable desire for all things sports and tailgating.  Of course, reality tells us that not every product will be a winner, but this January at the 2012 Sports Licensing & Tailgating Show, hope springs eternal in everyone’s heart.

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Consumer Electronics Show

The Invention Guru: Robert Montgomery and his wife Marcy at the CES show in Las Vegas

Most of us remember from school the opening line of Charles Dickens’ A Tale of Two Cities:  “It was the best of times, it was the worst of times…”

It was as if Dickens were writing about the 2012 Consumer Electronics Show held January 10-13 at the Las Vegas Convention and Sands Convention Centers.  Local television commentators estimated that 180,000 CES attendees had descended upon the city.  It must be “the best of times.”

But just as everything was happily getting started, Microsoft’s Steve Ballmer shook the trade show to its quick with his Keynote Speech.  2012 will be Microsoft’s last CES and he expected more companies will choose not to let the timing of CES rule their new product announcements.  Although Ballmer didn’t come right out and say that CES will join most other industry trade shows into a decline, one could read between the lines.  With one speech, it suddenly became “the worst of times.”

Dickens’ next phrase was: “it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity.”  2012 CES exhibited products, and announced even more future products, showing without a doubt that we are living in “the age of wisdom.”  As for “foolishness,” CES had computer based games of every ilk.   And, in January 2012 while walking through the miles and miles of exhibits, there is no doubt that the human race has a “belief” in technological wonderments that are perfectly “incredulous.”

What will come of the CES in years ahead is left to be seen.  I’m sure that it will remain important as a gathering call for the most technologically advanced of our species.  What will no doubt change is the timing of new product announcements by companies.  Severed forever are the chains to the second week of January.  And just as importantly, products not meeting the CES deadline will no longer suffer the stamp of failure.  Companies will introduce new products when it is best for the company without risking getting lost in the noise of hundreds of other introductions at oneLas Vegas trade show.

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Epilogue:

Las Vegas appears to be coming back from some bad economic times.  Stalled buildings like The Fontainebleau are finally being finished.  New structures are going up.  More people are staying in the hotels and eating in the restaurants.  These are very good signs that the end of the biggest downturn since the Great Depression may be coming to an end.

We have come to the end of another year and look forward optimistically to a new year – goodbye 2011.  It’s time to wrap up the year.  So while considering appropriate subjects, it quickly became clear that there were too many important topics to pick just one.
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2011 – THE YEAR OF PATENT WARS:

Patent Wars began this year.  Patent acquisitions mounting into the billions of dollars were purchased to serve as the ammunition in the personal electronics marketplace, especially for the exploding Smart Phone market.  The patent bidding war really began when Apple, Microsoft and their partners beat Google with a $4.5 billion bid for Nortel’s patent portfolio.  The objective for the patent purchase was a not-so-subtle attempt by the group to hinder Google’s Android SmartPhone platform from earning market share by filing infringement law suits.

Not to be outflanked in the war, Google countered with a $12.5 billion purchase of Motorola Mobility and its valuable patent portfolio.  Google was also able to acquire some patents from IBM.  Who will win the war will be one of the big stories for 2012.
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THE UNITED STATES PATENT OFFICE:

The Patent Office has been in turmoil for a few years now.  An enormous backlog of patent applications finally reached a point where something had to done.  Complicating everything was Congress using the Patent Office bank account as a piggy bank to fund other programs.  The money raids made it impossible for the Patent Office to operate effectively.

Everything changed with the signing into law of the bipartisan America Invents Act on September 16.  Many significant reforms are underway along with needed financial stability for the Patent Office.  Now fees paid by inventors will stay with the Patent Office to improve the system.

As changes are being made, it is very curious to observe the timing of patents as they course through the Patent Office.  This past week our office had three utility patents issued all with a December 27, 2011 date. (Patents are issued on Tuesdays.)  One issued application was filed on May 19, 2011, the second filed on February 6, 2009 and the third filed on November 6, 2007.  Therefore, from filing to issuance, the first application took 7 months, the second took 2 years and 10 months, while the third took 4 years and nearly 2 months.

Don’t feel too bad for our third client.  Because the patent application took excessively long, the patent term was extended nearly three years (actually 1085 days) beyond the standard 20 year utility patent term.  Sometimes good things happen to those who have to wait.
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CHINA:

2011 saw continued price increases in China for finished products.  Gone are the days of pennies instead of dollars.  Along with increased prices, wages have improved to the point where China has the beginnings of a true middle class that has spending power.  One of our manufacturing partners has started selling American-made products to China.  That’s right.  China wants products in American boxes, printed in English with no reference to China.  There appears to be a growing impression amongst the Chinese that products made in America for the U.S. marketplace is of superior quality and that’s what they want for themselves.  Made In America is not dead yet.
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HOW TO INVENT A MONEY-MAKING INVENTION:

When meeting with our manufacturing partners, I always ask:  What products are they looking for?  How can we better advise our clients?  How do they pick the money-making inventions?

So as we begin a new year, here is the secret:  Invent something that the masses will want, that is not available today, and that has a high perceived value as compared to the actual cost.

]]> http://inventionideasblog.com/2011/12/year-end-review-for-inventors/feed/ 0 http://inventionideasblog.com/2011/12/a-long-shot-invention/ http://inventionideasblog.com/2011/12/a-long-shot-invention/#comments Wed, 21 Dec 2011 16:01:35 +0000 Robert Montgomery http://inventionideasblog.com/?p=1198

The December 2011 edition of the Patent Office’s bi-monthly ”Inventor Eye” is interesting because it validates your Invention Guru’s philosophy that it takes the coordination of legal, engineering and marketing expertise to take an idea through patenting and onto the marketplace.

Nowadays Patent Office personnel are getting out into the inventor community in order to be more responsive to the needs of inventors.  The article about “The Polester” by John Calvert of the Patent Office’s Office for Innovation Development describes a typical story for many individual inventors trying to make their inventions into profitable products.  The product could be virtually any product, just like the inventor could be any small-entity inventor.  The path to success is basically same.

Enjoy the article!

The Polester -

Takes a Long Shot in Digital Photography

For the past two years, the United States Patent and Trademark Office has attended five different Maker Faires in California, Michigan and New York. This summer, I walked into the Henry Ford Museum to cool off from the 95-degree weather and passed a gentleman showing off his invention. He had an adjustable pole with a camera attached on the end capable of taking pictures in places that were not easily accessible. The inventor, Jim Polster, was exhibiting and demonstrating his invention, the Polester. Get it?

I recently caught up with Jim to learn more about his invention. He told me he used to be a cabinet maker but retired from that business and was working for a roofing company. One day, the roofing company gave Jim a 25-foot ladder and a camera and sent him out to take pictures of leaking roofs. One day, after he almost fell off the ladder, Jim started thinking of a safer way to take pictures without the risk of being so high off the ground.  He took some toy construction set pieces and built a holder for a camera, then added the pole from a roof snow rake to create the first prototype of the Polester. Next, he took some pictures with this contraption. “I made adjustments to the prototype when I needed to overcome problems,” Jim said.

So, how does the Polester work?  A camera is mounted in a holding device with a spring-loaded trigger positioned next to the shutter button. The holding device is then mounted to a pole capable of making angle adjustments for the best view. The operator raises the pole to the proper level and lightly pulls the trigger to automatically focus the lens before snapping the picture. It is really quite simple and very easy to learn how to operate and make adjustments.

Jim said, “I didn’t have the knowledge or understanding of the patent system,” referring to his comfort in filing his own patent. However, he found a backer that helped with the financing so he could hire a patent attorney and get some legal assistance through the USPTO. A little more than two-and-a-half years after he filed his application, Jim received U.S. patent 8,002,480 on Aug. 23, 2011, for a “Mechanically Activated Remote Device for Actuating a Camera.” The issuance of this patent helped him meet two of his goals—demonstrating proof of concept and getting intellectual property protection in the form of a patent.

Jim realized a third goal after selling 220 units of his invention—marketability. While his sales have not been high enough to support him financially, he still sees his invention as a success. Jim acknowledges that his product is not for everyone, but those who have a need should take note of a highly engineered and quality product. None of the 220 units he has sold have been returned.

Out of the original 20 or so markets he identified as his original target audience, he has made inroads in at least eight of those areas. Home inspectors use the Polester to take pictures in places where access could be dangerous such as crawl spaces behind tightly placed machinery or roofs. Jim has also built a customer base with government agencies using his device for a variety of needs including bridge inspections, law-enforcement forensics, and  waterworks and sewer treatment plant inspections. Jim is a member of several  inventor clubs, refers to inventor blogs, and even worked for one of those large invention companies that say they will do everything for you. He has some advice for aspiring inventors paranoid about their own inventions.

“They think that someone is going to steal the idea, but in reality the likelihood of a company taking an idea from an inventor and developing the invention is very small,” said Jim, and added that many people have similar ideas that result in similar products being developed.

“My invention isn’t the first remote on a pole, but it is different enough to receive a patent,” he said. To learn more about the Polester visit www.longshotcamerasystems.com.

by John Calvert : Office of Innovation Development

Your Invention Guru today finds himself in the United States tropical paradise of Key West, Florida.  While looking out at the blue waters of the Atlantic Ocean and Gulf of Mexico blending together, my quest is to compose an InventionIdeasBlog. The temperature back at the office is 34° with snow flurries in the air.  On my balcony, it’s a breezy 75° with lots of sunshine.  This should be proof positive that your Invention Guru will make any sacrifice, face any peril to bring you insight into the world of inventions.

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The Lipitor patent, owned by Pfizer Pharmaceutical, expires on November 30, 2011.  Nothing lasts forever and forever for Lipitor patent rights ends today.*  Patents for drugs grant a monopoly to the owner for 20 years starting on the official filing date.  Patents cannot be renewed.  In those 20 years, companies need to get the patent issued, receive FDA approval, market the product, and hopefully earn back the cost of R&D to ultimately make a profit for their shareholders.

The vast majority of new drugs fail to overcome the necessary hurdles.  Getting a new drug patented and passed by the FDA takes many years and millions of dollars.  Then after all that, some unexpected side effect may force the drug off the market.  This was not the case with Lipitor – it was a big winner for Pfizer.

In simple terms, a patent is a bargain struck by the inventor with the government for a monopoly of a set number of years in return for allowing free use of the invention upon expiration of the patent.  It is a bargain that has served the United States well, dating back to 1790.

It will be a long time until there is another drug like Lipitor.  The king of the cholesterol fighting statin class, Lipitor was beneficial to those who needed the drug while grossing up to $14-billion dollars a year for Pfizer.  Even in the final patent rights year, Lipitor was a money maker bringing in $11-billion.  And best yet, after the R&D costs were paid off, Pfizer’s per pill cost was only a penny.  Thirty cents to produce a month’s worth for each prescription that retailed between $115.00 and $160.00, depending upon dosage.  It was not all net profit for Pfizer because marketing, packaging, advertising, shipping, and pharmacy wholesale costs had to be deducted. Nonetheless, Lipitor was in large part responsible for making Pfizer #1.

Because patents have a life span and don’t last forever, the expiration of the Lipitor patent could potentially mean the loss of one-sixth of Pfizer’s revenues with no replacements in the pipeline.  When drugs go off patent, generic producers are free to use the patent without paying royalties.  Generic drugs generally work equally well for most, but not all, people.  When generic alternative drugs hit the market, retail pharmacy prices drop about 25% initially and then gradually plunge down to about 80% off the original on patent price.

It is typical for the name brand to lose a lion’s share of the business to the generics when a drug like Lipitor comes off patent; however, this time Pfizer has developed a revolutionary marketing plan to retain a substantial portion of the business.  Pfizer’s plan is to offer patients a Co-Pay Card allowing Lipitor to be purchased for $4.00 retail.  Special pricing deals are also being struck with health insurance providers.  Pfizer’s new strategy should allow the “off patent” Lipitor to be nearly the same cost as the generic atorvastatin pills.  Although the big profits are gone for Pfizer, they are finding a way for Lipitor to continue saving lives while also making money for the company.

*  (Most patents filed since the summer of 1995 expire in 20 years after filing. Design patents expire 14 years after issuance.)

Your Invention Guru is a most happy man.  I received my advanced copy of Time magazine’s November 28^th“Invention Issue.”  Everything stopped at the office.  My doors went shut.  It was just me and my “Invention Issue” with a Hummingbird Drone on the cover that only the Department of Defense could love.

Before heading into a list of the top 50 inventions for the year, there is a very interesting keynote article on page 56 written by Lev Grossman entitled “Reinventing The Inventor.”  As Grossman correctly points out, “In the age of Steve Jobs, it’s all about perfecting the final product.”

Being first with a new product is not nearly as important as making the product the best it can be.  The hyphenated words are more critical than ever: cost-effective and user-friendly.  Jobs wasn’t necessarily first with his revolutionary inventions.  In fact, he might not have been that creative of an inventor at all.  But what he did do was perfect the Personal Computer, iPod, iPhone, iPad and Digital Movie Animation.  He knew what we wanted, and how we wanted it, before we knew that we wanted it at all.

To prove Lev Grossman’s assumption that first to invent isn’t as important as best to invent, let’s take a look at some of Jobs’ most famous inventions.

• Radio Shack with hundreds of retail stores across the country beat the Apple II to the market back in 1977.
• Kane Kramer, a British engineer, was the inventor of the first digital music player in 1979, some 22 years before the iPod.
• IBM introduced the first smartphone called Simon 15 years before the iPhone hit the market.
• Alan Kay’s tablet computer was featured in Stanley Kubrick’s 1968 classic motion picture “2001: A Space Odyssey” some 42 years before Jobs gave birth to the iPad.
• And it was Charles Csuri’s 1965 film about a hummingbird that was the first digitally animated movie and not Pixar’s 1995 Academy Award nominated Toy Story.

All this is proof that when it comes to inventing, it is good to be first, but it is far better to be best.

For all you inventors out there, including my own clients, do not despair if you failed to make the Top 50 list.  Reviews of Time’s lists of past top inventions have not proven to be a guarantee for future riches and fame.  Curiously, Steve Jobs never made the Time’s Top 50, although he did pretty well for himself.

Time’s 2011 List of the 50 Top Inventions has something for all us.  In a few years, we’ll know if there are any hall of famers in the 2011 invention class.  Rather than bore you with a recap of Time’s list which you can easily read for yourself.  Take a look and pick your own favorite invention.  The list of inventions that Time put together this year is outstanding, but if I had to choose just one favorite, my choice would be DRACO, a new drug being developed by MIT that promises to eliminate the Common Cold.

To read more:  http://www.time.com/time/specials/packages/0,28757,2029497,00.html

Dateline: Washington,DC – October 31, 2011
Event:  United States Patent Office’s Webinar on the America Invents Act
Speakers:

David Kappos, Director of the USPTO
Teresa Stanek Rea, Deputy Director of the USPTO
Robert L. Stoll, Commissioner for Patents
Bernard Knight, USPTO General Counsel
James D. Smith, BPAI Chief Administrative Patent Judge

Below are the highlights impacting “small-entity” inventors from the October 31^st Webinar held by the top brass of the Patent Office for the intellectual property community.  The recently signed into law America Invents Act was the topic.

• Current backlog of unexamined pending patent applications is estimated at 669,625.
• The goal for pending patent applications by 2014 is 350,000 with all applications being examined within 10 months.  The 10 month period is important because it will allow two months for inventors to make a decision on whether to file for foreign patents.
• By 2014, the goal for bringing a patent application to a final disposition will be 20 months.  20 months is considered important because patent applications are not published and made public prior to 19 months.
• The Patent Office reported a 5% increase in patent applications filed this year with projections for a continued 5% increase each of the next few years.
• The new Micro-Entity classification for low income inventors, who will receive a 75% discount off Patent Office fees, is not expected to be implemented for 12-18 months.
• The Patent Office is planning on hiring and training 1500 new Patent Examiners starting immediately.
• The Patent Office is accepting patent applications into the 1-Year Expedited Patent Application Examination program.  The cost is $2400.00 for “small-entity” inventors, a 50% savings from the normal fee.  The maximum number of applications for this faster service is 10,000 per fiscal year.
• Contrary to popular understanding, the America Invents Act does not guarantee that the Patent Office will keep 100% of the fees that are collected from inventors, although this is the stated objective of the law.  Each year, Congress must appropriate funds to run the Patent Office.  For the current fiscal year, Congress allowed the Patent Office to keep all of the collected fees.
• Prior to the America Invents Act being signed into law by President Obama on September 16, 2011, Congress diverted $208,000,000.00 of paid inventor fees to other Congressional uses.
• When Director Kappos took office a little over two years ago, he placed a heavy emphasis on improving the quality of issued patents.  Patent Examiners were encouraged to take whatever reasonable time that was necessary to award or to finally reject an application.  Part of the increased backlog was the result of this emphasis on quality.  Director Kappos does recognize the need to find a balance between quality and timeliness.  According to recent Patent Office’s statistics, the balance is starting to be achieved.
• As of today, the United States remains a First To Invent country.  The change to First To File will not begin until March 16, 2013.