PATENT 101
For MLM Executives

By Jeffrey A. Babener
  2002

Everybody talks about patents.  Direct selling companies that have patented products extol the exclusive and proprietary nature of the goods they market.  When consumers hear patent, there is an aura of magic that is added to any potential purchases.  So, what are patents - and how do they work?  Here is Patent 101 for direct selling executives.

What Is It?

From the beginning, the United States has recognized the importance of providing an incentive to inventors to invent.  It is the backbone of our economy and our science.  Therefore, the government grants a property right through the U.S. Patent and Trademark Office, for a period of 20 years from the filing of the patent application through granting of a "patent," the exclusive "right to exclude others from making, using, offering for sale or selling the invention in the United States" or from "importing the invention" into the United States.  In other words, whoever owns the patent of an invention has a 20 year legal monopoly for the marketing of an invention. 

Of course, merely because an inventor has a patent does not mean that he or she is exempt from laws that might restrict the sale of the invention.  For instance, the inventor of a new type of nuclear bomb may not market or sell it because federal law prohibits the sale of such products.  The patent does not create any exemption from existing laws. 

What Can You Patent?

The patent laws provide that any person "who invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement, may obtain a patent."  So, first off, the subject matter of the patent must be "useful."  A machine that won't perform its intended purpose could be an invention, but it may not be "useful" and, therefore, will not qualify for a patent.

It should be kept in mind that a patent does not cover merely an idea or a suggestion.  A complete description of the actual machine or subject matter for which a patent is sought is required of the patent office.

The Invention Must be a New or Novel Idea.

Patent law provides that an invention must be new or "novel."  In other words, an invention cannot be patented if:

            "(a)       the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention" or

            "(b)      if the invention has been described in a printed publication anywhere in the world, or if it has been in public use or on sale in this country before the date that the applicant made his/her invention, a patent cannot be obtained." 

This is very important.  It makes no difference when the invention was made, nor when there was a printed publication or public use of the intention.  If the inventor describes the invention in a printed publication or uses the invention publicly, or places it on sale, then the inventor must apply for a patent before one year has gone by.  If not, the patent will be lost.

So, what is "new?"  Well, it may be an entirely new invention or it may be an improvement on an earlier invention.  The important thing is it must be so new that it would be viewed as such to "a person having ordinary skill in the area of technology related to the invention."  And, of course, merely substituting one material for another or changes in size are typically not sufficient to make something new.

Where Do You Apply the Patent?

In the United States, inventors make their application to the U.S. Patent and Trademark Office to the Assistant Commissioner for Patents.  The inventor will submit a detailed written document with specifications and drawings, if necessary.  And, yes, as with other government agencies there are filing fees.  Other countries throughout the world have similar processes for applying for patent protection.

Who Can Apply for a Patent?

Under U.S. patent law, only the inventor may apply for a patent.  If two or more people are involved in the invention, they apply as joint inventors.  Merely because a third party provides a financial contribution for a patent invention, it does not mean that the third party can apply as a joint inventor.  Of course, and as often happens, the inventor will make an "assignment of patent rights" to individuals who have financed the invention  or who have purchased a license for patent rights.

Enforcing the Patent.

Once an inventor is granted the patent, he or she now has the right to exclude others from marketing the invention.  If companies without patent rights offer for sale the patented invention or import it into the United States, the owner of the patent rights may file a patent infringement action in U.S. federal court to obtain an injunction to prevent the continuing infringement and can also obtain damages.  Of course, often times, in such actions, the party being sued may challenge the validity of the patent, whether it is a "novel invention," etc., and that must be decided by the court.

The Backbone of Our Economy.

The reasons for protecting patent holders is obvious.  The future of our economy and science is dependent upon the free flow of new ideas and technologies.  Our patent laws give protection to inventors and encourage them to share their inventions with the public, and reward them with a special package of rights for their creativity.


Jeffrey A. Babener
Babener & Associates
121 SW Morrison, Suite 1020
Portland, OR 97204
Jeffrey A. Babener, the principal attorney in the Portland, Oregon law firm of Babener & Associates, represents many of the leading direct selling companies in the United States and abroad.

www.mlmlegal.com

Main Library || MLM Legal || Babener & Associates || MLM Articles || Power Index