Patents in the Outdoor Industry

By Charles H. Van Gorder

Manufacturers and retailers should be aware of potential problems regarding patents in the following two categories: 1) when might I get in trouble for patent infringement, and 2) when might I lose valuable intellectual property rights? These questions are addressed following a brief overview of patent law.

General Patent Information
A United States patent provides the patent holder the right to exclude others from making, using or selling a claimed invention within the United States, as well as from importing infringing devices. To obtain a patent, the inventor must devise a "non-obvious" improvement in existing products, processes or patents. The term of a patent is 20 years from filing date of the patent application. The cost of a patent can range from $6,000 -- $15,000 (and potentially higher) depending upon the complexity of the invention and other factors. A patent can take a year and a half to four years to issue, depending upon many factors. A provisional patent application usually can be filed at lower up-front cost, but it must be converted into a full patent application within a year of filing. 

Patent Infringement
Perhaps the greatest concern in introducing a new product is whether it infringes upon an existing patent owned by someone else. A manufacturer should conduct an infringement study prior to manufacturing a new product. A five-minute change on the drawing board sometimes can prevent an infringement problem. A manufacturer may do a preliminary search on the Internet at sites such as IBM's intellectual property web site (www.patents.ibm.com) or the U.S. patent trademark office site (www.uspto.com). Searching for terms that describe the product or the name of a competitor might turn up patents that could pose infringement problems. Such a search is no substitute for a full infringement search conducted by a patent specialist, but it at least provides an opportunity to spot a potential infringement problem.

To infringe on a patent, the infringing device must copy each and every element of a claim in a patent. These claims are the numbered paragraphs located at the end of a patent and are difficult for a layperson to understand. If a manufacturer comes across a patent closely related to a product or process the manufacturer is considering, a patent attorney should be consulted. The patent attorney may be able to suggest a design change to avoid an infringement problem. Alternatively, a license could be negotiated with the patent holder to permit the use of a patented design or process.

Note that a U.S. patent application is not "published" until the patent issues, although in the fall of the year 2000 the United States will publish patent applications 18 months after the filing date. Therefore if a competitor's product expressly states "patent pending" or "patent applied for", this is a signal that a patent application may be "in prosecution" and could issue in the near future
Infringement Risks for the Retailer

While a retailer can be sued for patent infringement when selling an infringing product, the retailer usually can pass the infringement problem back to the manufacturer or supplier of the infringing product. If a retailer has any notion that a product might infringe a patent, they should contact the manufacturer and consult a patent attorney. As a practical matter, it is all but impossible for retailers to catch infringement issues if there is no indication that the product they are selling is infringing upon another's patent.

The general rule is that manufacturers must indemnify retailers against patent infringement claims. However, if that risk has been contractually shifted to the retailer, if the manufacturer has insufficient financial resources to indemnify the retailer, or if the retailer is private labeling, a manufacturer's indemnification obligation may be of little comfort. Also, a retailer may still incur significant legal costs in fighting an infringement claim or enforcing a manufacturer's indemnification obligation. 

Protecting Your New Idea
The United States provides patent protection for the first to invent, not the first to file a patent application. Therefore, if you have a new idea, document your idea with sketches and text to reasonably convey how a new product would be made, and then sign and date it. Also, have two witnesses who are not co-inventors read and understand the documentation, and sign and date it. This procedure establishes the "conception" of the idea. From that point forward, you must be diligent in actually making the product and not abandon the idea until the patent application is filed. If there is a priority contest in the Patent Trademark Office with another inventor, this documentation is crucial for preserving your rights.

There are many other situations where documenting your invention in writing can be important. Assume a retailer who has a lot of experience with customer complaints and returned items comes up with an idea to improve a product. He informs the manufacturer on the improvement but has no written documentation. The manufacturer later files a patent application on the improvement and is issued a patent with broad claim coverage. The manufacturer now has exclusive rights to this improvement, and the retailer who originally thought of the idea is left without a piece of the action.

If the retailer simply had written out the description of his idea in the manner described above, he could have preserved his rights in the invention. Better yet, the retailer could have shown the manufacturer the documentation for the new product and had the manufacture sign and date the drawing. After establishing conception of an invention and before presenting the idea to a manufacturer, it is a good idea for the retailer to have the manufacturer sign a confidentiality agreement.

Loss of Patent Rights/Statutory Bars
An inventor must file his or her patent application within one year from the date of any sale, offer for sale or commercial use of an invention in the United States, and within one year of any publication of the invention anywhere in the world. This concept should not be confused with establishing conception as described above. Even if you have your idea written out, signed and dated, if you let the cat out of the bag you have only one year to file a patent application. For example, if a manufacturer publicizes a new product in a trade show, the manufacturer has one year from that publication date to file a patent application in the U.S. Note that most foreign countries do not provide a one year grace period. Therefore, if you intend to acquire foreign patent protection, a U.S. patent application should be filed prior to any publication of your idea.

Joint Development of an Invention
Sometimes a manufacturer wants to incorporate an improvement into its product line and jointly develop the concept, possibly with a retailer or some other company with experience in the area. There must be an understanding that the idea and its further development will be owned by a single entity (e.g. partnership, corporation, LLC, etc.). Ownership of a patent is a distinct issue from who invented the new product. As soon as development of a potential idea begins, there should be an agreement that the intellectual property rights resulting from the joint development work are assigned to a single entity. The legal ramifications of no such agreement can jeopardize the validity of the patent. One possibility in a joint development situation is to assign the invention to a new entity and grant the manufacturer an exclusive license for production. In return, the inventor receives a royalty on sales of the patented item.

Employee invention agreements
When an employee invents a new product or process, the ownership of the idea is at dispute - does the employee or the employer own the patent rights? An employee invention agreement will usually resolve the ownership question, but most manufacturers do not have such assignment provisions in their employee contracts. In general, absent any written agreement, the answer depends upon whether the employee was paid to invent, and whether the invention coincides with the line of business of the employer.