ATDC BrownBag: Obtaining a Patent

Obtaining a patent is necessary to protect the valuable IP that your company is built upon.  However, the process can be expensive, complicated, and cumbersome.  Is there a better way?

John Harris, from Morris, Manning and Martin, LLP, will be here at the ATDC to present a more economical and practical strategy for obtaining a patent.  John is a partner in the Technology/IP practice at MMM and has advised clients on intellectual property matters for 25 years.  The session should be very practical as John shares his insights in the patent world – from patent searching and competitive intelligence to the appropriate disclosure documents needed when meeting with a patent lawyer. 

The BrownBag session is on Wednesday, February 25 and check-in begins at 11:45 am.  Lunch is provided.  The session is free, but you must register to attend. 

Common Legal Questions For Startups

I saw this post from a Guy Kawasaki interview. It’s a great overview of some of the things entrepreneurs ponder when starting a company.  Although the questions are geared towards California entrepreneurs, they also apply to Georgia.  Of course, you should check with your attorney for specific details. Here are the questions addressed:

• Can I start a technology company in the same business as my current employer?
• When should I incorporate?
• Why don’t I use a Limited Liability Company (“LLC”) since it is cheaper to start?
• Why does everyone incorporate in Delaware?
• Should we incorporate as an S corp or C corp?
• Should I incorporate offshore since my business will focus on China/India?
• Can I have everyone in my startup be contractors or consultants (“1099 services”) rather than employees?
• How can I grant stock options to employees and consultants?
• How does the corporation obtain ownership of the technology and IP from each of the founders which was developed before we incorporated?
• Can I hire people away from my former employer
• Can I file a provisional patent application myself?
• If we have been issued a patent, won’t that stop a Microsoft from copying us?
• Shouldn’t prospective investors sign non-disclosure agreements (NDAs) so that they don’t rip off our ideas?
• If my buddies and I own more than 50% of the corporation, don’t we control it?
• Why should founders vest–we’ve already been working on the business for two years?
• Why does it cost $50,000 or more to do a round of financing?

See the answers on Guy Kawasaki’s blog.

HO, HO, HO

Teri Simmons from Arnall, Golden, and Gregory led a great session on immigration issues for startups today.  She talked about quotas, green cards, Hs, and Os. If you need to hire a non-American worker for your company, here are a few things I learned.

H visas are visas for college degree or equivalent workers.  The H visa allows someone to work in America for 3 years and they are eligible for some extensions.  It will cost about $3-4K for fees and attorneys.  You must pay them a fair rate – so you can’t hire cheap overseas labor and bring them here and pay them the same cheap rate.  There is a quota on how many the US will allow each year and that quota was exceeded on the first official day of filing!  So basically, no more will be available to be issued until October 08.  This is a big issue that is stirring up the technology industry.  Even Bill Gates is getting involved.

For startups, there is the extra challenge of proving to the immigration office that you have the funding to pay the employee during their 3 year visa period. But today I learned about a new class of visa.  The O visa.  It is reserved for extraordinary people that are highly specialized, have PhDs, have won awards or are heavily published.  There are no quotas on these visas, but you must prove to the immigration office that their specialty is hard to find.

Green Cards are for permanent immigrant visas.  There is a lengthy process of proving that you are unable to hire an equivalent American worker before they will allow you to file for one.  There are also limited quotas for these each year.  This costs about $10K for all the fees, attorneys, etc.

My overall thoughts are that it is a lengthy and confusing process, the government is working on reform, and you need a good attorney to help you figure it out.  You don’t want to make a mistake because there could be negative effects on your employee and their family.

Teri and I will be working on a 2-page overview of "Immigration Issues for Startups" and we will post it when it is complete.

Are Patents Losing Their Value?

Recently an article by the New York Times (membership required) called into question the value of patents for public companies.  Over the past few months, several significant initiatives have gained momentum in the commercial, political, and judicial arena.  Some of these reforms are no-brainers and are long overdue. Wikipatents and the Peer to Patent project are exciting new concepts that give us hope for increased efficiency from our patenting system.  Unfortunately, many proposed changes are not straightforward and may have unequal and unintended consequences for early stage technology companies. 

One initiative worth tracking is the post-grant opposition process that is incorporated in the Patent Reform Act of 2007.  A good summary is available here.  In a nutshell the post-grant opposition process gives companies the right to initiate a review of a granted patent without incurring the costs of a legal proceeding.  Many believe that such a provision, inappropriately implemented, seriously weakens the presumed validity of issued patents.  This translates into more risk for technology companies that rely upon patents and ultimately entrepreneurs will bear this risk, especially when seeking external capital to fuel their ideas.

Fortunately, this issue has been brought to the attention of our federal legislators and organizations like the NVCA are educating our lawmakers.  If patents are important to your business, keep a tab on the Patent Reform Act, hire a good patent attorney, and make sure you get a thorough debriefing once all the dust has settled.

Web 2.0 Legal Traps

MMM (Morris, Manning, & Martin) has recently created a Web 2.0 practice area within their law firm.  On Wednesday July 11, their experts, Paul Arne and Sandra Sheets Gardiner, will hold a session to discuss legal issues critical to social media and user generated content.  If you are an entrepreneur in this space or considering a startup in this hot area, you should attend or at least dial in and listen.