Startups and Patents: How to Make Money with Your Invention

06/02/22 • 31 min

J.D. and Matt talked with Nicole of The Law Offices of Nicole B. Erickson based in Portland, Oregon - she gave us some great insight on business formation and underlined an important tax law under the 2018 Jobs Act which allows sales of patents to be capped at 20% capital gains instead of potentially 37% taxation at the higher income levels. We also interviewed Karen Hwang, a business attorney based out of Chicago, Illinois - she gave us really good insight on what it takes to go to market and sell your product/service while keeping focused on protecting liabilities. She explained the basics of forming an LLC, and creating solid brand protection through trademarks before getting too far along. Nicole explained the different types of business structures including an S-corp and when it may/may not make sense to choose an alternative business structure. The four attorneys then critiqued the Boost Oxygen product as it was shown on Shark Tank. J.D. highlighted that the patent protection they have is not a utility patent, but instead is on the design of the mask/nozzle on the top of the canister. J.D. went on to talk about the timing of a patent and the duration of a design patent. The patent in this case will expire in 2 years - so it can take 10+ years sometimes to bring a product to market. Matt pointed out that Boost has only secured design mark protection, but seemingly has not secured any word mark protection yet. Nicole and Karen discussed the pros/cons of raising money or asking for equity or debt (loan) when starting up and what implications there may be.

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Everything discussed on this podcast is for informational purposes only and not for the purpose of providing legal advice.

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Previous Episode

Patents and Startups w/Business Lawyers Len Garza and Alexandra Devendra

Len Garza and Alexandra Devendra, business attorneys from their own respective practices were on the Bold Patents show and let us in on the essential reasons why inventors should think carefully about whether and what type of entity to form. Len discussed raising money and pointed out that when investors give a company money, they are really investing in the founder/inventor - and to get that investor committed, you've got to show business acumen, not just technical. The business can't just be about the product itself. Alix walked our audience through an example of a client of hers who is an optometrist that needed to form a separate LLC to hold the patent assets separate from the professional services company that runs the operations of the clinic. She gave some examples of different types of companies that can be formed, and briefly talked about how her law firm, Aligned.law is a Certified B corporation in the state of Oregon.

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Next Episode

Bold Patents' 9-Step Process with CEO J.D. Houvener

J.D. explains the 9-Step Patent Process that our beloved inventor clients at Bold go through to secure patent protection. He pointed out that each of these 9 steps can be found at the blog article here. Matt jumped in and talked about how the trademark process is someone similar and how Bold has really embraced new startups and solo/small inventors through their development of a clear, easy-to-follow process. We did a Bold Bite of a very gross product called the "Pop It Pal" which is a zit popping simulator that was pitched the sharks. J.D. explained that the USPTO standard for "utility" is quite low, and even a product like this, that has no innate value, does provide entertainment benefits, so it DOES meet the requirement to be eligible for patent protection. J.D. explained that this invention doesn't appear to have been awarded a patent yet, and is still pending at the moment. Matt mentioned the branding and confirmed their trademark registration. One AVVO.com question was answered regarding mixing multiple types of alcohol together and rebranding it. Aside form the concern from ATF or other local drug and alcohol enforcement agencies, as long as the new blend is not passing off goods (meaning, not showing the labels or brands of the products mixed in), there was not any trademark infringement on its face.

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