Big Changes to Patent Law Coming. Is Innovation at Risk?

The U.S. House of Representatives and Senate have each passed similar versions of a bill that will make big changes to the patent system, with only conference committee changes standing in the way of it becoming law.  The America Invents Act makes several changes to the way patents are filed and protected, but the biggest one for small businesses and entrepreneurs is the change from the current "first to invent" system to a "first to file". Under the current system, if you invent a patentable invention, you have one year from the time you disclose it to file the necessary paperwork with the U.S. Patent and Trademark Office.  This time is typically spent improving the concept, working with collaborators, or speaking with investors who could help fund the project.  The new system takes away that "grace period" and gives to the first person to file the paperwork the right to patent the invention, regardless of whether they participated in the invention or not.

For example, an entrepreneur or small business might not have the necessary funds to file the patent on their invention in the first place (a patent can cost $15,000 or more to file).  If that inventor describes the invention to investors as it tries to raise the money, the investor would be able to file for the patent before the inventor had raised the money.  This will cause major changes to the way that entrepreneurs and investors interact with the investment community and would give a decided advantage to investors or corporations with deep pockets to trump the rights of individual inventors.  That will have the effect of stifling innovation rather than supporting it.

Any inventor or entrepreneur is going to have to reevaluate their processes and be much more careful with their intellectual property once this bill becomes law, which is expected in the near future.

Attempts by States to Control the Internet Are Just Beginning

Last year, new privacy regulations became effective in Massachusetts, which required businesses to take a series of actions whenever they held personal financial information of Massachusetts residents.  The law had far-reaching implications because it could effectively cover businesses that had no other ties to the Commonwealth. Now California is making its own privacy grab by targeting the (somewhat dubious) privacy policies of Facebook and other social networking sites with the proposed "Social Networking Privacy Act".  Anyone who uses Facebook, Google, Twitter, and the like knows that it is difficult to control how your personal information is stored and used - or frankly, what each site's fluid policies even cover at any given time.  This has caused well-documented user confusion and angst, and has led to many privacy breaches.

But California is pushing privacy restrictions to a new level.  The Massachusetts privacy law, for example, regulated mostly back end processes and governed how personal information would be protected by the companies once it was acquired.  The difference here is that California's bill will affect how the companies interact with their California users, from requiring how the companies collect the personal information, to what they can do with it.  The bill would require Facebook and the others to change not only how they collect information from their users, but also what information can be posted by default, and how information can be removed.  One provision gives parents the right to remove information posted by "minors", meaning anyone under the age of 18 (a provision that I am sure would not exactly be popular with high school students).

The bill will likely not make it into law in its current form, partly because of this alliance of powerful opponents.  But it is clear that states are starting to take privacy issues very seriously, and, in the absence of a federal alternative, will still try to take action to protect its citizens.

Welcome to 2011 - Startups Hitting a New Stride

Boy, how time flies.  After being tied up with a flurry of work to start the year, I realized that is has been a while since my last post.  The good news, though, is that that work will turn into a series of new posts, including some posts on buying and selling of companies and what businesses can do now to help make that process simpler (and less expensive!) when the time comes. To celebrate a good start to 2011, it looks like the state of the economy continues to be fertile ground for new businesses!  Why not take the opportunity to become your own boss and to launch that idea that you have kicking around in your head?

Corporations scam arriving in your mailbox

The year-end is approaching and companies should start to think about annual meetings.  The Massachusetts corporate law is similar to many other state laws requiring corporations to hold an annual meeting for the purpose of electing board members and other corporate governance.  For many smaller corporations, this is a typically an easy process, but that does not mean you should ignore it. However, recently I received some forms in the mail from "Massachusetts Corporate Compliance" that would help me complete this process - for a fee.  You do have to file a notice annually with the Commonwealth of Massachusetts, but these forms are not it.  The Massachusetts Secretary of the Commonwealth even posted a notice about this solicitation.

When you are filing your annual reports in Massachusetts, you can do so with a simple online filing at the Secretary of the Commonwealth's Web site.  Happy New Year!

The Business Law Blog Has a New Honor But the Voting Is Not Over!

After the votes were counted and your comments were read, Lexis Nexis has selected The Business Law Blog from all of the nominees as one of the 2010 Top 25 Blogs for Business Law.  I am humbled by the honor; there were many very thoughtful and successful blogs in the nominee pool.  But I am excited to now be one of the finalists for the Top Business Blog of the Year! And you can help.  Lexis Nexis has set up a site with the finalists (nothing like being first in an alphabetical list, I say).  All you have to do is (1) click the link at the bottom of that page to go to the voting page, (2) click on the button next to your favorite blog, and (3) click the "Vote Now!" button.  That's it!  As before, you have to be registered with the site to vote, but anyone can register and it is a painless -- and solicitation-free -- process.  Plus, if you registered in the first round, you don't have to register again.  Just head straight to the voting!

Again, I want to thank everyone who made comments in the first round of voting.  I very much appreciate your time and positive thoughts.  This blog has been a great way of establishing a dialogue with you and I look forward to continuing.  So go vote for your favorites and continue to visit this site to read and join in the discussion!