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Small Business | SMALL-BUSINESS REPORT

Long Road to a Patent Can Pay Off in Profits

April 19, 2006|Cyndia Zwahlen | Special to The Times

Getting that first patent is a big step for most small businesses. It usually caps several years of effort and hefty patent expenses, but the payoff is the potential to profit from an invention while enjoying protection from copycats for up to 20 years.

That's the goal at Rocstorage Inc. of West Los Angeles, a 5-year-old maker of computer-data storage devices. The privately held company with 65 workers designs, assembles and sells hard drives under the Rocstor brand and is about to file for its first two patents.

The patent applications are for a secure biometric data-storage device aimed at users in the military. A user's fingerprint and a second step, such as a password, key or card, will be required before the user can access data on the matching hard drive.

What's new here, according to the company, are the extra steps necessary to access the data and the hard drive enclosure technology. The two patents cover different aspects of the same device.

"There are no 100% secure products like this in the market," said Asher Ghadoushi, director of business development at the company. "If the military had our products, they wouldn't be worried about their secrets being sold at a Middle Eastern bazaar," he said, referring to recent reports of U.S. military memory sticks for sale in Afghanistan.

Rocstorage has hired a patent attorney who has completed an initial search to see whether similar patents exist, and the attorney believes the company's ideas are patentable. The company is now crafting its patent claims and hopes to file them with the U.S. Patent and Trademark Office within six months.

Given the patent office's backlog, it could take three years before Rocstorage finds out whether it will get its patents.

Although using an attorney or an agent registered with the U.S. patent office is not required, it can make sense for a firm to get help, especially the first time out. Experts know the importance of creating a patent claim broad enough and strong enough to discourage infringement and to win legal challenges.

With or without an attorney, it's expensive. Rocstorage expects to spend $20,000 in legal fees for its two patents.

The U.S. patent office has set fees. For small entities -- those with fewer than 500 employees -- the costs include a $150 filing fee, a $250 search fee and a $180 examination fee, plus $700 if a patent is awarded. The patent office also charges $500 to $1,000 for appeals, as well as maintenance fees of $3,500 to keep a patent in force over its lifetime.

Computer-related or biotech patent costs can be much higher.

In the U.S., patents are awarded to the first to invent a product or process. Outside the U.S., patents are awarded to the first to file for a patent on the product or process. That's an important distinction.

"In the U.S., whenever you disclose or offer for sale some kind of invention you have, the clock starts running and you have one year to file a patent application on it," said Francisco Rubio-Campos, founding partner at Eclipse Group, an intellectual property law firm in Granada Hills.

Under international patent rights, which are geared to getting new ideas to the market as soon as possible, there is no one-year provision.

"So if you disclose enough information about your patent to enable a skilled person to practice the invention without undue experimentation, you have effectively given your invention to the public," Rubio-Campos said.

The disclosure rule applies to anyone at your company, not just the inventor.

Once you have confidentiality agreements in place, you can begin the search for similar patents. Although some attorneys use professional search firms, many experts recommend that a company conduct its own preliminary search.

"That can educate the small company as to what the competition is and what's been done before," said attorney Charles Berman at Greenberg Traurig in Los Angeles.

Next, you can decide whether to file for a provisional or regular patent. A provisional patent application is less expensive because it requires less work initially, allowing an inventor 12 months to file the actual claims for most patents.

"The advantage is it can be done more quickly and can give the entrepreneur time to try to promote the invention commercially before spending a lot of money on a patent," Berman said.

The next step is to write the claims that are the basis of a patent. Rubio-Campos estimates that an application for a simple invention can take an experienced attorney 20 hours to write. The hourly rate is $250 to $400 or more for many Los Angeles-area attorneys.

"Patenting is invariably an expensive exercise," Berman said. "The more the inventor educates himself about it, and the more they can do themselves, the better it's going to be."

Morning MBA

Those who want to earn a master's of business administration but can't attend the evening classes typical of most executive MBA programs might consider Pepperdine University's new Morning MBA. Classes will be held twice weekly, 9:30 a.m.-1 p.m., in West Los Angeles and Irvine. The 28-month program includes seven weeks off each summer. The application deadline is June 19. Visit www.bschool.pepperdine.edu/morningmba.

Cyndia Zwahlen can be reached at cyndia.zwahlen@ latimes.com

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