US patent office Fee schedule questions

If you want the official USPTO fee schedule, here it is.  If you want to read questions I have about the fee schedule, then read on from here.

The search fee for a utility patent is $620, and $310 -- if the applicant is a small entity.  It is known, but I can't prove it's known, that the complexity of the search depends on the type of invention.  An application for a latch is usually easier to search for than an application for a method of moving electrons in a certain way.  This is because latches can usually be pictured and it's hard to picture a method for moving electrons without describing it.  Pictures are easier to search through than written descriptions.  For me, the fact that searches vary in difficulty but don't vary in price, raises the following questions.

Should there be a different fee for different applications that claim different inventions, i.e. does it actually take more work to search for some inventions?  Do different fees raise the barrier to entry into the patent game, for certain arts? Does the patent system incentivze innovation if it charges applicants more when they apply for inventions that are hard to search for?  Do other countries do it differently? do private companies do it differently? I'll answer these questions in a later blog.

Why you should allow

As an examiner, you might think that more valid patents are good because they encourage innovation; are bad because they hamper innovation; or they're the thing that gets you paid.  

If you think that more valid patents are a good thing, then allow more valid patents and encourage innovation.  This assumes that you believe the constitutional intent of the patent system is "[t]o promote the Progress of Science and useful Arts..."

If you think that more valid patents are a bad thing, then you still want allowances. More valid patents will gum up the system and make the drawbacks of the patent system more vivid.

If you think issuing patents is a way to get paid, then you still still want allowances.  The office works on counts.  You have to get a certain amount of counts each bi-week to get your paycheck and bonuses.  A first action allowance is worth two counts, a first action rejection is worth 1.25 counts.  A second action allowance is worth .75 counts, compared to a final rejection which is only worth .25 counts.  "ALLOW!!"  

Project planning with fudge

I have spent a little time planning different projects.  I have seen that when setting out to do something that hasn't been done by you before, it helps to add a fudge factor.  I did this during a job interview and predicted the timeline of a project to build a heavy duty engine more accurately than the team that was actually in charge of the heavy duty engine *cough a team of Daimler engineers cough*.  I have also seen this lack of fudge factor blow up in my face *cough moving to D.C. and thinking I could get a nice apartment for less than $1,000 cough*.

The fudge factor is to multiply your expenses by 1.5 and multiply your resources by .75.  If I had done this before moving to DC then I would have seen that my expenses were somewhere around 4.3k monthly and my income would have been more around 3.8k, which, it turns out, is almost dead on for my life in D.C.

Case study: becoming a millionaire in one year using the fudge factor.  You need to make 1.5M to be a millionaire, because 1M*1.5=1.5M.   And you have nine months to do it, because 1yr*.75=9mo.  Now that you know your actual costs and the actual time you have to do it in, the rest of the planning phase is just number crunching and a little bit of reading.

1.5M/9mo means about .16666M per month needs to be netted.  If you sell a product with a $6 profit (think $40 product) then you have to sell about 27k products each month.  $.60 profit and you have to sell 277k products, and on and on and on.  NOW!  You know your profit margin and you know the width of your supply chain.  Find a supply chain that can support 27k products moving through it per month:  Off the top of my head, Walmart, Target etc.  Find a product that you can move 27k per month at a $6 profit:  Off the top of my head, nutritional supplements, shirts etc.  Now I know what your saying/thinking... I don't know how to do any of that and I will fuck it up :(  Yes, Mr./Ms. Negativity you will fuck some of it up and that's why there is a fudge factor.

Some of you who are reading this will think that is is not scientific and it isn't the way we should be planning projects in this day of high technology and easy data analysis.  Well, first off, in science we use constants all the time, Plank's constant, 9.1m/s^2 etc.  They are just things that make equations work out better, even though they are not completely accurate for all cases over all time.  And if a constant is working to predict real world events then, it may not be pretty, but it is pretty useful -- and scientific.  As far as technology and data are concerned, this just lumps all the rounding errors and unknown unkowns (thanks Mr. Bush) into an easy to consider fudge factor.  Collect the data, know the knowns and the knowables and then add the fudge factor.  If you still don't like the idea of using the fudge factor without some sort of data backing it, go through old projects you ran and apply the fudge factor to the data you had when you started the project.  If the numbers come out close to what actually happened then the fudge factor is a good predictor.  Finally, it's true that 1.5 and .75 are just guesses but they are constant guesses which makes them better than random guesses because they will deliver consistency in an area where there was little consistency before, i.e. guesstimating, which is half of project planning anyway.

Intellectual property in the Russian Federation

The Russian legal system is a civil legal system.  That means that unlike common law legal systems (United States) there is no judge made law.  The Russian Federation makes all the laws and they are administered by different federal agencies.  The Russian law that deals with Intellectual Property is the Civil Code of the Russian Federation Part IV section VII.  The agency that handles Intellectual Property in Russia is the Rospatent.  Part IV section VII covers sixteen kinds of Intellectual Property:

1. Works of science, literature, and art;
2. Computer Programs;
3. Databases;
4. Performances
5. Phonograms;
6. Broadcasting or diffusion of radio or television transmissions via cable;
7. Inventions;
8. Utility Models;
9. Industrial Designs;
10. Selection attainments;
11. Topographies of integrated circuits;
12. Secrets of production (trade secrets);
13. Trade names;
14. Trademarks and Service marks;
15. Appellations of origin;
16. Commercial names.

These categories are the unofficial translation of the Russian form of Part IV section VII.  So some of the words have no American equivalent because we don't protect the category, and some have no English equivalent because the word just doesn't translate.  For example, trade names, appellations of origin, and commercial names all fall under Trademark Law in America; Whereas Selection attainments cover what we might call plant patents in America, but the selection attainments' scope is much broader, so this is a term whose meaning was lost in translation.

I think it's interesting to note the difference from the American system where we protect source of origin markers (trademarks); new, useful, and non-obvious machines, processes, and articles of manufacture (patents); original works of authorship (copyrights); and secrets that are valuable because of their secrecy (trade secrets).  The Russian system has more distinctions, but it's hard to tell what those distinctions mean without a look into the applications of those distinctions.  I will do this in my next post about Secrets of production in the Russian Federation.

NAFTA sec. 1711 trade secrets in North America

The North American Fair Trade Agreement is a treaty signed between Mexico, Canada, and America.  In section 1711 of NAFTA the countries reached an agreement about trade secrets.  The agreement goes like this:

• All member countries must provide legal means to prevent trade secrets from being disclosed, acquired, or used by someone other than the trade secret owner in a manner contrary to honest commercial practice, without the consent of the owner.
• All member countries agree that a trade secret is: 
• information that is secret;
• has actual or potential economic value;
• and the owner of the information has taken reasonable measures to assure the information's secrecy.
• All member countries can't limit the time a trade secret is protected for.
• All member countries can't make it unnecessarily difficult to license trade secrets, either by fees or procedures.
• All member countries agree that if their drug approval system requires disclosure of potential trade secrets that those trade secrets will be protected from disclosure by the member country. 

Importing trademarked goods and the gray market

Sometimes trademark owners sell their wares in other countries.  So, you might think that if you can go to the other country and get trademarked goods for cheap that it makes sense to have it imported back to the U.S. and to sell it for less than what it sells for in the U.S.  Unfortunately the Tariff Act of 1930 prohibits this sort of business.  Title 19 U.S.C. sec. 1526 is the section that outlaws this behavior and it says that it is unlawful to import into the U.S. any merchandise made in another country if it bears a trademark owned by a person or business that was created or organized in the U.S.; the trademark is registered by a person domiciled in the U.S.; and the registration is filed with the secretary of the treasury; unless you have the written consent of the owner of the trademark.  These goods are called gray market goods because in the country they were in, they were authorized goods with a valid non-counterfeit trademark on them.  However, when those goods are imported they become illegal.  If you get caught importing gray market goods then:

• first time, you get a fine for less than the value of the goods' American suggested retail price;
• any time after that, you get a fine for less than two times the value of the American suggested retail price;

The fine is at the discretion of the U.S. Customs services and it is in addition to any other criminal or civil penalty.  Also they seize your goods and you don't get them back.  Lastly they can shut your business down and stop you from selling these imported gray market goods. 

Beltronics USA, Inc v Midwest Inventory Distribution, LLC, 562 F3d 1067, 1069 (CA 10 2009)

This is a business story about authorized dealers of radar detectors that stripped the serial numbers off the detectors so that they could sell the detectors through back channels. The distributors were sued, and lost, for trademark infringement.

Beltronics made radar detectors and sold them to two authorized distributors.  Beltronics' distribution agreement said that those two distributors were the only ones who could distribute the product.  The two distributors stripped the serial numbers off the radar detectors and then sold them to other distributors.  The authorized distributors stripped the serial number off because they didn't want Beltronics to know that it was the authorized distributors who were selling the radar detectors to other distributors.  Beltronics found out and sued for trademark infringement.  The authorized dealers defended by saying that Beltronics lost its rights when it sold the detectors to the authorized distributors, this defense is called the first sale doctrine.  The court held that the first sale doctrine does not apply when the alleged infringer sells goods that are materially different than the goods sold by the trademark owner.  The court found that stripping serial numbers off detectors makes the detectors materially different.  The authorized distributors lost the trademark infringement suit.

So, if you're going to breach a distribution agreement with your supplier don't do it in a way that materially changes the goods that the supplier supplied you with;  Or, you can do whatever you want and just budget for a trademark infringement lawsuit.