Popular Articles

Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

read more
by Beth Ewen
August-September 2014

Related Article

How to keep your 'secret sauce' secret

Read more

Extra Protection

Are you a ‘me’ company? If so, you’ll never attain your ultimate value, says an intellectual property expert. Upsize asked four attorneys how they advise clients to protect and capitalize upon their IP assets, and they obliged with these tales and tips.

Step one is putting maximum effort into building your brand.

interviews by Beth Ewen

Upsize: You’ve written that too many small companies are ‘me’ companies, which diminishes their ultimate value. What do you mean?

Michael Lasky, Schwegman Lundberg Woessner: When it comes to intellectual property, there are three basic rules and they’re constantly violated by small companies, because more often than not small companies are ‘me’ companies.

At the end of the day, most of the things that are happening in the company are the result of ‘me,’ the owner.

The first thing you have to do is turn a ‘me’ company into an IP company, basically in many cases by building the brand. A company is not saleable for anything other than its intellectual property.

I talk about Uber, the driving service. Uber is an amazing company because it owns absolutely nothing except the brand. It has an app, which anybody can duplicate. It has a concept that anybody can and has duplicated.

But what distinguishes them? They have infused their idea of the service delivery into this very unusual and strong brand.

This company is being built up into high valuations, and people say that’s crazy. But they all know that Uber or Uber-like services are going to replace taxis. So the question is then, not whether the Uber concept prevails but which one?

It’s not just having a name. It’s investing a feeling in the customer from your name.

Upsize: If so many small companies are ‘me’ companies, as you say, how can an owner turn that into a brand?

Lasky: First you have to back up and say, why do I care? Well, the majority of business owners today are in their 50s and 60s and they’ll want to sell their business if they can. Why do I care? Because one day I want to get my second payday out of my company.

If my company is successful, then I get my first payday, meaning the profits I make over the years. If you’re a ‘me’ company, you have to make a fundamental switch in how you view your company.

Put your shoes in the buyer’s position. And what does the buyer buy? The two things I want as a buyer are transferable assets and scalability. Can you scale your business to be five times larger without having more of you?

And if the answer is no then probably no one will ever buy your business.

Upsize: You’ve written that companies make a mistake when they use a name that describes what they do, because those generic words can’t be trademarked. Describe what you mean.

Lasky: If you create a brand that nobody can own it’s not a brand. The first rule is, if no one can own it, it’s of no value. Many small companies do not have the confidence to choose a trademark that isn’t a descriptor.

If you have the courage to not pick a descriptor, it will pay you back over and over. But it takes courage.

Upsize: And the second rule of IP?

Lasky: The second rule is, if you don’t own it, it’s of no value. That sounds obvious, but 65 percent of small companies don’t own their trademarks.

They think they’re fat and happy because no one has challenged it, but one day when they come to sell, the first question will be do you own your trademark and in 65 percent of the cases the answer will be no.

Upsize: That brings us to rule No. 3.

Lasky: A brand is more than a trademark. It’s the story behind the words. The trademark is Apple, but the brand is the message: we make products that are so beautiful you will like owning them, and we make them simple and safe to use so you don’t really have to learn much.

Once you’ve figured out who you are and what your message is to the world, you need to remember that it takes a long time to get that message out. So rule No. 3 is stay focused, don’t quit. The payback is enormous.

What is the most extreme example of a brand that has raised the value of the product beyond all possible logic? It’s the Hermes Birkin bag. It sells for $152,000. The story is Jane Birkin is on an airplane.

She’s taking a wicker basket from the overhead compartment and all the stuff falls out. The Hermes CEO is sitting next to her. She says, I can’t find a bag that I like that will keep my stuff in. The Hermes Birkin bag is the product, and they cannot make enough of them, they can charge anything they want for them.

That’s an extreme example but it’s a real one.

 IP physical identifies
and protects assets

Upsize: You advise companies to do an intellectual property physical. What is it?

Tim Matson, Lommen Abdo: I call it like going to the doctor and getting a legal physical. The first point is that intellectual property permeates everything, and not just entertainment and technology companies, but all companies have a need to look at their IP and have it reviewed and make sure it’s protected.

It’s because we’re in the information age, so all companies should look at this.

What I do, and I’ve done this many times with large clients and emerging businesses, is first try to figure out everything under the sun that could give rise to an IP right that’s owned or controlled by a company.

Upsize: So first step, figure out what we own. What’s next?

Matson: Second step, figure out which IP right applies to each asset, and which rights to pursue, based on cost vs. benefit. So trademark, automatic you have to protect it.

If you’re putting money into branding, you’ve got to make sure the branding the company is using is available, and then second to determine whether or not you can file and own the thing and stop others from using it, and create the brand.

And then we analyze whether there’s any defects in ownership, like registration or licensing. Or with employees, there’s a big problem if companies contract out their software development.

If you don’t have the proper assignment of IP rights, you won’t own that which they develop for you.

The reason to do this is to protect that which you own, make sure you’re properly licensed for things you don’t own, and then it also underscores the core value of the company: What is it that makes this company go?

I think optimization of assets can be highlighted by an IP physical.

Upsize: What should companies do about watching for infringement?

Matson: The key point is there are no trademark police or copyright police or patent police who will go after an infringer. It is the company who has to protect its own IP.

For trademark there are watching services, and when something happens you’ll get pinged saying somebody is trying to secure trademark rights.

Then it’s incumbent on the owner to go after the infringer. If you don’t do that, if you don’t police your mark, then your rights may actually hemorrhage over time.

 Changes to patent law

affect all inventors

Upsize: I’ve been reading about recent changes to patent law. Describe the most significant.

Jim Nikolai, Nikolai & Mersereau: A few years ago, Congress passed the America Invents Act, and that did a number of things to the law. Some of them relate to when you should file your patent applications.

You’re no longer given that one-year grace period to file. You can certainly wait but anyone who beats you to the patent office will have priority over you.

That‘s a big change that should cause people to proceed more promptly with patent protection. We get clients to think about filing even provisional patents before taking their products to trade shows, for example, because anybody can walk by and see what you’re doing.

Other issues arising from the act relate to challenges to the way patents are granted.
Some of these review procedures have replaced some that have been in place before, but they’ve also raised a lot of the fees.

So it requires a more strategic decision to file these procedures, because of the cost.

One example is the request for re-examination. For a large entity with more than 500 employees, just to request re-examination is $12,000; for a small entity it’s $6,000.

That’s just the government fee, but you also have the professional services the lawyer’s going to charge. So claimants are getting more diligent about looking at the patents their competitors have and deciding whether to challenge.

Companies have to decide, is my best recourse to redesign the patent, or combat the patent, or license the product? There are different costs, and different other ramifications for each of those strategic options. One needs to think strategically.

Upsize: Patent trolls are also in the news, those that enforce patent rights against infringers but do not sell products based on the patent in question. What’s the latest?

Nikolai: There are a number of court cases that have been decided that are interesting, and there are a number of bills going through Congress to address the so-called problem of trolls. The real solution to the problem is to make sure when the patent office is granting patents, that they’re meritorious.

Patents are assets that individuals and companies can own that exclude others from selling your product.

There’s something to be said if the manufacturer is enforcing the patent right, but you also run into situations, too, where individual inventors don’t have the capacity to bring their patents to market and they’re looking for other ways to bring their inventions to fruition.

My hope is that as Congress and the courts look at the whole issue of patent trolls they’re also taking into account that a lot of innovation comes from the workshops and garages of individuals.

That’s even true of some of the major companies that mark the Twin Cities landscape today. Many of those companies found their start as individuals. It isn’t like Medtronic was always Medtronic.

Upsize: True, it was Earl Bakken in his garage.

Nikolai: And the same kind of story with St. Jude. We are where we are as a country technologically, and we need to be able to encourage inventors’ ability to make money.

Upsize: And you feel Congress and the courts are hampering that ability?

Nikolai: Congress is going to hear from people who have the financial wherewithal to present information to Congress, and it isn’t always going to be the garage inventors that have that wherewithal.

What I worry about is that some of these smaller players that don’t have the resources to lobby Congress, their interests will not be taken into account.

Upsize: Share the best advice you give to your business owner clients about IP.

Nikolai: This is true whether you’re talking about patents, copyrights, trademarks or the like, you need to look at two aspects:

No. 1, what rights are you trying to protect and what tools are available to protect those rights?

And the flip side of that equation is, how do you put processes and procedures in place to make sure you’re not infringing the rights of others or getting too close to the line where you’re going to generate a claim?

Getting charged with infringement can result in substantial business disruption and expense, and if there are ways to avoid that you should take them.

Upsize: And what are those processes and procedures?

Nikolai: In the area of trademarks, for example, we strongly advise that a trademark clearance investigation be undertaken. The first step is relatively inexpensive.

We do a quick screening search to make sure no identical marks have been registered for the same goods or services. We can do a whole bunch of those in a short period of time, so they’re not expensive.

And then once they settle on one or two marks we recommend that a full search be undertaken. They run between $1,000 and $1,200, but all you have to do is face a trademark opposition, and you’re going to chew through that $1,000 or $1,200 in no time.

Then I haven’t even brought up the amount if you had to re-package all your products, change all your signage. So it’s really prudent to do that in advance.

Cost/benefit analysis must inform ip hunt

Upsize: For smaller companies, what are the best practices when it comes to capitalizing upon intellectual property?

Tom Dickson, Patterson Thuente IP: The first question we always have is, what’s the best type of IP protection that they need. If it is a new device, a patent might be the best route. If it’s a new service it might be a trademark.

If it is a modification of something it might be a design patent. Or it could be their money is best spent not even filing for IP.

Because ultimately, whether you take the time or the effort to formally file something, there’s a cost-benefit analysis as to whether that’s worthwhile.

That’s because patents are very expensive to prosecute all the way through, from a couple thousand to $100,000 process. Trademarks are orders of magnitude less, $1,000 or $2,000; design patents are a couple thousand .

Upsize: Do you find most of your clients, even smaller ones, are well-versed in this area or not?

Dickson: In general small and midsize companies are less attuned to IP than large corporations. And so you spend time on education. People are always surprised that it takes a while to get a patent or even a trademark.

The message I get out is these are great things to have to protect an investment you’re making, but the patent owner has to do the legwork and sell the product or be purchased by somebody.

Upsize: I would expect most companies are familiar with trademarks.

Dickson: If you’re going to invest some money in building brand recognition for a name, then it’s a shame if you don’t file a trademark. It allows you to know no one is going to copy you. Trademarks are very, very common.

Upsize: What’s a common mistake made by small companies?

Dickson: Small companies, when they’re building their portfolio, their eyes are so big as to what they think their market is. They want to file their patents everywhere in the world. They think they’re going to have a market in Europe, in Japan, in China.

And then the trouble with that, the patent applications every year in the foreign countries cost you money, and then you have these small companies with hundreds of thousands of dollars of foreign filing fees and they don’t have money to file anything new in the U.S.

There has to be a reality check. We spend a lot of time with small companies saying, where do you think your markets are, where is your competition? We have to help you manage so you don’t go broke filing for patents everywhere.

[contacts]
Tom Dickson, Patterson Thuente IP: 612.349.3004 dickson@ptslaw.com; www.ptslaw.com

Michael Lasky, Schwegman Lundberg Woessner: 952.253.4106;
mlasky@slwip.com; www.slwip.com

Tim Matson, Lommen Abdo: 612.336.9331; tim@lommen.com;
www.lommen.com

Jim Nikolai, Nikolai & Mersereau: 612.392.7302;
jim.nikolai@nm-iplaw.com;
www.nm-iplaw.com.