I was happy to have been selected as a judge for yesterday evening's (March 6) Greenlight Michigan Competition. All the presenters were stellar: tackled a wide variety of issues, had great business plans, and showed amazing enthusiasm!
AgHelp: mobile platform that helps farmers find workers to harvest their crops, while increasing the earning potential for farmworkers and connecting them with local resources and support.
Modular Home & Garden, LLC: Project Kits are designed to be completed in minutes, with no tools or fasteners. Our patent-pending product simplifies DIY saving consumers time and money!
Trinhydral: An easily carried mobile water purifier unit that requires no electricity that can hold enough for a family
BlueKite: Educational platform
Bitcoin Capital Management: Bitcoin Capital Management is a cryptocurrency trading platform the makes investing into Bitcoin and cryptocurrencies simple and easy.
By: Michelle Lewis, J.D.
TL:DR Everyone loves a good story. Patent examiners are people, too. Tell a compelling story in your specification and your interviews and you’ll get better patents faster.
Effective storytelling is a recommended approach to many business communicators – leaders giving presentations, marketers selling products, and interviewees seeking jobs, to name a few. In this post, I am adding inventors (and their patent attorneys) seeking patent claims. If you tell a compelling story during patent prosecution, you’ll be leveraging a basic human need and engaging the Examiner’s brain to get the business result you seek.
As reads, standard patent specifications are real snoozers. Paragraph after paragraph of information is included to enable every possible direction the invention could take. It is, by definition, technical. Court decisions have pushed the use of laundry lists, self-serving definitions, and boilerplate language to new lengths. Despite the need for all this extra snooze-inducing padding, use the story-telling tips below to flesh out the story of your invention during reduction to practice, drafting, and prosecution.
TIPS DURING REDUCTION TO PRACTICE
TIPS DURING DRAFTING
TIPS DURING PROSECUTION
Use these suggestions wholesale or to jumpstart your own approaches to telling an effective invention story in patent drafting and prosecution. Of course, each of these suggestions need to be balanced with business needs as to the scope of the disclosure and, perhaps, related knowhow or trade secrets. However, for the great majority of to-be patented subject matter, fashioning a story about the invention, the problem or problem(s) it solves, and how the work has contributed to the art will help. Tell that story to the Examiner during prosecution and get claims allowed more broadly and more quickly.
By: Tom Vogelsong, Ph.D.
There has never been a more opportune time to start a medical technology/healthcare company. Recent advances in sensors, stem cells, big data, wearables, molecular imaging, cloud storage, gene editing, networking/connectivity, regenerative medicine, and machine learning are astounding. An increased focus on outcomes, efficiency, and cost combined with an aging population provides unprecedented potential for early stage medical/healthcare/biotech companies to make a difference in people’s lives and be financially successful.
However, it is extremely difficult in this economy for these early stage companies to raise the necessary capital to move forward. Venture capitalists have become increasingly risk averse when it comes to funding early stage medical companies. Many innovative entrepreneurs have started developing products and services providing breakthrough capabilities to diagnose, monitor, assist, or heal people. They typically tap into friends, family, or local angel investors to get sufficient funding to demonstrate their concept. Just when these entrepreneurs feel confident that they really have something special, they realize that it will take several million dollars to productize their concept, pass regulatory approvals, build up production, protect their IP, staff up, and market their capabilities. Securing this level of funding with the risks of an unproven customer base causes many of these businesses to fail in what has been labeled “the valley of death.”
Meanwhile, there is a growing number of medical professionals and other medically savvy individuals who have significant investible assets and they are seeking the opportunity to invest in promising medtech start-ups. They can leverage their own expertise to identify financially attractive opportunities and provide advice to help these companies thrive. Until recently, these individuals have not had access to investment opportunities with early stage medtech companies. Professional investment advisors cannot provide this access and most of these individuals do not qualify to be limited partners in a VC fund.
Fortunately, a new type of investment vehicle - equity crowdfunding - has recently been introduced and is rapidly gaining popularity. Many people have heard about crowdfunding efforts using platforms such as Indiegogo or Kickstarter to donate money to a cause and receive a trinket or at least a good feeling in return. However, a much more powerful and lucrative method of raising capital is via equity crowdfunding. Such a method of offering an equity position directly to individuals through an internet portal (website) has been enabled in the US by recent legislation as part of the JOBS (Jumpstart Our Business Startups) Act. Title II of the JOBS Act, passed in 2014, enabled equity crowdfunding platforms to be introduced to promote start-ups to accredited investors. Title III, passed in 2016, opened equity crowdfunding up to non-accredited investors, but with significant restrictions. The equity crowdfunding market size was $2.5B in 2015 and is projected to grow rapidly to over $96B by 2025, reaching 1.8x times the size of the global VC market!
Brian Smith (formerly an investment advisor facing the limitations stated above) and Jerry Harrison (a pioneer of crowdsourcing in the music industry) formed RedCrow in 2016 with a mission to bring this new approach of raising capital to a specific niche - medtech/healthcare - where it is sorely needed and where the results will benefit society. Others have formed non-curated equity crowdfunding platforms that allow any business to be listed - what we call the yellow pages approach - which provide limited value-add to the companies listed. Alternatively, RedCrow assembled a strong team of medical, financial, marketing, and technical experts to ensure that the companies selected for listing are high quality and have dedicated resources to help them succeed. RedCrow sought out a crowd of accredited investors with expertise in the medical area who make reasoned investment decisions as well as provide valuable feedback to the companies throughout the RedCrow investment lifecycle.
RedCrow developed a unique two-step method to maintain the quality of companies listed, while positioning the companies for success. The first step is “Discover Supernovas.” In Discovery, a company shares its profile with the RedCrow crowd prior to fundraising. This early exposure stage enables the company to gain valuable feedback from the crowd, shape its message, and gain buzz and momentum. In parallel, RedCrow performs its own due diligence on the company, again with a goal of positioning the company for success. Once a decision is made to go on to “Invest” (the second step), RedCrow works with the company to create a marketing plan including a professional 3-5 minute video profile, which has proven to be successful in our social media campaigns. Once RedCrow and the company complete the regulatory paperwork, and assuming the momentum is strong, the company’s pitch deck and offering documents are placed on the Invest platform and the marketing campaign kicks into high gear. Only RedCrow registered investors are able to view the offering details. At that point, each registered investor can make his/her own decision about investing. RedCrow facilitates the investments, utilizing its direct invest technology, and tracks progress towards the company’s goals.
This model of equity “niche-funding” has gotten off to a great start at RedCrow. Within the first year, five companies closed on their funding. Most recently, BrainCheck closed on a round that exceeded its original goal of $1.5M. Another company that closed a round, Ixcela, has signed on for a second round. We at RedCrow are now scaling up, reaching out to start-up companies, incubators/accelerators, institutions, and start-up contest competitors. We currently have over 100 medtech/healthcare companies in our pipeline and are simultaneously growing our crowd of investors. As noted in the January 9th issue of Bankless Times, RedCrow recently formed a partnership with the Innovation Institute (www.ii4change.com) which could add over 200,000 medical professionals to our crowd of potential investors, advisors, and doctorpreneurs.
With this new approach to connecting those with knowledge and money to early stage medical companies that need access to funding and expert knowledge, RedCrow is breaking down one of the major barriers preventing passionate entrepreneurs from introducing innovative products and services that will benefit society. Simultaneously, we are enabling medically savvy individuals to invest in what they know!
For more information, visit the RedCrow website at redcrow.com, check out linkedin.com/company/redcrow-crowd, or contact Tom Vogelsong at firstname.lastname@example.org.
By: Ashley Sloat, Ph.D.
Starting Tuesday, January 16, 2018, the USPTO will be raising patent fees. In general, fees will be increased $5 to $50 for micro entities, $10 to $100 for small entities, and $20 to $200 more for large entities. Particularly notable fee changes include (all based on small entity status):
The USPTO also added sequence listing fees for sequence listings having a file size in excess of 300MB or 800MB and a fee for providing a sequence listing late in response to an invitation under PCT rule 13.
This is just a brief overview of the changes that will be effective on January 16, 2018. For a more complete view, please see the pdf below in which I have highlighted all fees which will change on January 16, 2018.
Over the past year, there has been uncertainty, fear, and doubt when it came to how the Research and Development Tax Credit, or R&D Tax Credit, would emerge from tax reform. At times, special interest groups claimed that the credit may become irrelevant or even disappear altogether. Meanwhile, those involved in drafting the legislation provided reassurance that the credit would remain, keeping the provisions that were recently added by Congress in 2015 to benefit startups and small businesses.
The R&D Tax Credit is a constant line item in the budget sheets of large corporations whose profits reach several billions of dollars, but the truth of the matter is that this credit can be an even greater tool for small businesses and startups. The impact of this credit could provide small businesses with the resources to acquire more personnel, invest in innovation, and propel their businesses to greater success. The R&D Tax Credit has especially been key to the growth of companies in industries such as robotics, biomed, and pharma, where the highly technical nature of those industries allows for a significantly larger credit size. However, the R&D Tax Credit has also been utilized to benefit businesses that you may not normally associate with traditional research and development concepts—including app developers and even craft breweries. Additionally, the credit can serve as a great resource to Venture Capital firms when an evaluation is being made on the costs associated with funding a start-up.
The R&D Tax Credit has been a stimulus to the US economy since its inception in 1981. The law was drafted by the Reagan administration at a time when Japanese and European companies were generating massive profits from high technology. To encourage American companies to invest in domestically created high technologies, the R&D Tax Credit was implemented, which rewarded testing the bounds of science and creating revolutionary solutions, as well as new or improved products or processes. In 2003, to offset the loss of jobs to foreign labor markets, the applicability of the R&D Tax Credit was further expanded when the requirement that a qualified activity had to be “revolutionary” was removed. This requirement was replaced with the more feasible requirement that the qualified activity simply involve overcoming a “technical uncertainty”—one that was satisfied by the demonstration that the activity was new to the company, rather than new to the world. The “Four-Part Test” was created to summarize the above rules.
For an activity to be considered a Qualified Research Expense (QRE) the following test must be met:
1. Permitted purpose: The purpose of the research must be to create a new or improved product or process, resulting in increased function, performance, reliability, or quality.
2. Uncertainty: The taxpayer must encounter uncertainty regarding the most appropriate design of the new product or process, the appropriate methodology for achieving that design, or whether they are capable of developing it at all.
3. Process of Experimentation: The research must involve elements of experimentation, evaluating alternatives for achieving the desired result.
4. Technological in Nature: The research must rely on principles of the physical or biological sciences, engineering, or computer science.
Over the past few years, undoubtedly influenced by the technological boom and the influx of start-up companies into the US, Congress realized that the start-up and small business community had tremendous amounts of QREs, but could not benefit from the tax credit with the way the tax code was written. To allow the R&D Tax Credit, a major tool of innovation, to be used by the businesses that innovate the most, Congress revamped the R&D Tax Credit in 2015 with the passage of the Protecting Americans from Tax Hikes (PATH) Act.
The PATH Act removed the major pre-2016 hurdles that restricted small businesses and start-ups from claiming the R&D Tax Credit. First, Congress increased the credit’s accessibility by allowing businesses with less than fifty million dollars ($50,000,000) in average gross receipts for the three years preceding the filing year to use the R&D credit regardless of whether the company was subject to AMT restrictions. This exception began with tax year 2016 and it applies to privately held corporations as well as the owners of pass-through entities such as S-Corporations and partnerships. Second, since most start-ups do not make profit in their first few years of operation, and the credit is non-refundable, Congress created what has become known as the “Start-Up Exception,” which allows start-ups to use the R&D credits to offset their payroll tax. The purpose of the Start-Up Exception was to allow start-ups to enjoy the benefits of the R&D Tax Credit when it was needed most, rather than having the R&D Tax Credit sit on tax returns as a carry-forward for future income tax liabilities.
To qualify for the Start-up Exception, a company must:
1) have less than five million dollars ($5,000,000) in revenue from gross receipts, and
2) not have had revenue that precedes the 5 taxable-year period that includes the tax year in question.
To simplify, if you are looking at this exception for tax year 2017, you cannot have revenue from 2012 or earlier, and your gross receipts from 2017 cannot exceed five million dollars.
It should be noted that the benefits from the Start-up Exception can only be realized when requested via special forms in a timely filed tax return, so an amended tax return will only create the traditional benefits of offsetting income tax liability.
In conclusion, start-ups and small businesses have a resource available in the R&D Tax Credit that will propel their growth by allowing them to keep more of their earnings and allocate further resources to innovation and creating jobs. The next appropriate step is to speak with your tax professional, or a specialist who will work with your tax professional, to find out what needs to be done so you can be rewarded for helping to keep innovation in the US. The biggest obstacle preventing start-ups and small businesses from claiming the R&D Tax Credit is their own self-censorship (assuming they don’t qualify) or hesitance to learn more. With the tax season already approaching, sooner is better than later to see how your company might qualify for this lucrative tax break and claim a sizable credit by next year.
If you would like to learn more about the R&D Tax Credit, or how the credit benefits your specific industry, please explore our previously written articles.
About Apex Advisors
Focusing on the R&D Tax Credit, Apex Advisors' specialization and highly skilled workforce equals maximum value for clients. Apex Advisors' unique approach combines credit maximization and conservatism and has proven to be more efficient and effective than any other service provider. Apex Advisors' team consists of attorneys and CPAs from Big 4 accounting firms; in-house engineers with industrial experience; PhDs; and former IRS agents. Rather than one expert being assigned to an entire R&D Tax Credit study, each study has a number of experts assigned with the specific tasks that most benefit from the expert's knowledge.
As a result of a high level of expertise, and a unique study methodology, Apex Advisors' has never had a credit denied under audit. With one of the strongest track records in the industry for defending R&D tax credit claims with the IRS, due to meticulous documentation and a tax controversy team comprised of former IRS agents and attorneys, Apex Advisors stands by its clients and provides full audit representation for no additional cost.
About David Porada Esq.
At Apex Advisors, David Porada advises businesses throughout the nation and across a diverse set of industries on Federal and State tax incentives, including the R&D Tax Credit, to help them save significant tax dollars and remain competitive in the global marketplace. In addition to being a Lean Six Sigma Black Belt, Mr. Porada has a Bachelor of Arts in Political Science from Kalamazoo College, a Juris Doctor from the University of Detroit Mercy, is licensed to practice law from the State Bar of Michigan, and serves on two Board of Directors. Lastly, and probably most importantly, throughout the year Mr. Porada dedicates a few hours a week to coaching youth baseball, basketball, and track and field.
By: Ashley Sloat, Ph.D.
I love the argument that Ron Katznelson makes in his new paper, titled Private Patent Rights, the Patent Bargain and the Fiction of Administrative ‘Error Correction’ in Inter Partes Reviews. Ron argues:
"The exclusive patent right is not a creature of Congress. That right originates with, and is created by, the inventor. It is only secured by statute subject to the Constitution, as part of the patent bargain in exchange for the inventor’s public disclosure of the invention and of the manner and process of making and using it.
No PTO “error correction” in an issued patent is possible because the public disclosure (that might have been otherwise kept as a common-law trade secret) cannot be returned – the exchange of rights upon patent issuance is irreversible and uncorrectable. Extinguishing the inventor’s private patent right must therefore be the exclusive province of Article III courts."
The original right is created by the inventor but she is incentivized to publicly disclose the invention in exchange for protection under the Constitution. If the USPTO's PTAB strips away this protection, what remedy does the Inventor get for her public disclosure that now comes with no protection? The public disclosure most certainly can't be rescinded from the minds of people who have viewed it! I agree with Ron's declaration that extinguishing this right should only be under the purview of an Article III court.
By: Ashley Sloat, Ph.D.
Mastermine Software, Inc. v. Microsoft Corp. (Fed. Cir. 2017), as well as several previous cases, have ruled that mixing system and method claims in the same claim can lead to indefiniteness and ultimately invalidity. The reason behind this invalidity ruling is that a potential infringer may not be able to distinguish when he is infringing the claim – when he makes/sells an infringing system or uses the system in an infringing manner? So how do you avoid creating an indefinite claim?
(1) Make sure the apparatus or system performs the function or method steps;
(2) Avoid clauses in which a user performs a function or method; and
(3) Avoid standalone method steps (not performed by a system element) when the rest of the claim is clearly a system or apparatus claim.
When we at Aurora draft system claims in which components are executing functions or method steps, we use language along the following lines: “wherein the ‘element’ performs a method comprising: steps A, B, C…” This structure should avoid the issues enumerated above. Happy drafting!
An extremely useful article by Naira Rezende Simmons was recently published in the The John Marshall Review of Intellectual Property Law. The article discusses the count system the USPTO uses for Examiners to incentivize efficient and thorough examination of patent applications. As you will see in the article, the USPTO heavily incentivizes a quality initial examination of a patent application with less points awarded for final office actions and notices of allowance. This article is definitely worth the read.
Ashley Sloat, Ph.D.
Startups have a unique set of patent strategy needs - so let this blog be a resource to you as you embark on your patent strategy journey.