Interested in a Patent?

How many times have you seen the phrase "Patent Pending" on a product? Chances are, you've seen that phrase a lot, and perhaps you've also seen products that have patent # on them. Well, have you ever wondered what it takes to get "Patent Pending" status? Or what the patent process entails? If so, here is a brief overview of the process:

PATENTS

There are two main types of applications:

• Utility applications: 20-year patent term for devices and methods.
• Provisional application: this gives you 1-year of "Patent Pending" status, which allows you to protect your idea quickly, and with little overhead and risk, so that you can test the market and make sure your idea is worth pursuing. 
• Non-provisional application: this is the main patent application that will eventually lead to either a granted patent or being officially denied one. This application usually takes about 3 years to complete. When people talk about filing for a patent, this is usually the application they are referencing. 
• Design Patents: 14-year term for ornamental designs. This patent does not cover any functional aspects, so its use is limited.

The America Invents Act, which was made effective last year, changed the U.S. patent laws significantly. One of these changes made the U.S. a first-to-file country instead of a first-to-invent. In other words, it's a race to the patent office! 

If you've got an idea, or would simply like to know more about the patent process, feel free to call or email us for a free consultation.

Robert A. Gurr

Patent Attorney

Gurr & Brande, PLLC

(435) 634-8854

Are you still Operating your Business as a Sole Proprietorship?

Upon reading the title to this article you may have asked yourself, “What is a sole proprietorship?”  Well, a sole proprietorship is the simplest business form under which one can operate a business. It is not a legal entity, unlike a limited liability company (“LLC”) or corporation.  It is simply a person who owns the business and is personally responsible for its debts. 

                

Many people may be operating a sole proprietorship without knowing it.  For example, the stay-at-home mother who does freelance photography and earns income from those activities is a sole proprietor.  So is the brick mason, landscaping professional, or farmer who simply “went to work” and never formed a legally recognized entity by registering it with the state. 

               

Now you may be wondering, “I’ve been doing business as a sole proprietor, should I change that?”  As with so many other legal questions, the simple, yet unsatisfying, answer is, “That depends.”  One must consider the advantages and disadvantages of a sole proprietorship and weigh those against the advantages of other business forms.  This analysis is specific to each individual and his or her business. 

                

So what are some of the advantages of a sole proprietorship?  The most obvious advantage is that they are easy to form.  Really, no “formation” is actually necessary.  All that is required is for a person to offer a service or product for sale.  That’s it.   There are also no registration fees because there is no registration.[1]  Also, sole proprietors are not required to file a separate tax return[2] for the business.  This can save on accounting fees.  There are additional tax advantages.  One of the main tax advantages of operating a sole proprietorship is that the owner can deduct the cost of health insurance for herself, her spouse and any dependents.  The owner can take this deduction even if she doesn’t itemize deductions on her tax return.

Another advantage is that there are no operational formalities that a sole proprietor must follow.  By contrast, other business forms require their owners to keep their personal assets separate from business assets.  Since a sole proprietorship is not separate from the individual owner, there is no distinction between personal and business assets. 

While the lack of operational formalities can be an advantage, there is a cost to that benefit.  Since there is no distinction between business and personal assets, all of the sole proprietor’s assets are at risk should he be sued for actions he took in his business.  For example, if our brick mason negligently installs a brick wall for a homeowner and the homeowner gets a judgment against the brick mason through a lawsuit, any of the brick mason’s assets (e.g. his home, car, boat, bank accounts, etc.) may be used to satisfy the judgment.  Or, let’s say that the brick mason purchases brick from a supplier on credit.  If the brick mason fails to pay the supplier, the latter may go after the former’s personal assets to collect the costs of the brick. 

In addition to personal liability, there are tax disadvantages for a sole proprietorship.[3]  Sole proprietors are responsible for self-employment taxes, in addition to regular income tax. Self-employment taxes are the equivalent of the employer's share of the Social Security and Medicare taxes that all workers have to pay. When an individual works for an employer, he only pays the employee's portion of these taxes.  The sole proprietor, on the other hand, has to pay both the employer's and the employee's portions.

Another concern with a sole proprietorship is the attention it gets from the IRS. Business and personal expenses must still be kept separate and this can be somewhat difficult distinction in a sole proprietorship. Whereas a computer purchased for the sole use by the business is a business deduction, a personal computer is not deductible on an individual’s taxes.  The IRS is more likely to scrutinize business deductions for a sole proprietorship.

One popular alternative to a sole proprietorship is an LLC.  While a sole proprietor is personally liable for all of the debts and obligations of his business, owners of LLCs have limited liability for business activities.  Like the advantages discussed above, limited liability comes with a cost.  LLCs and their owners must be much more diligent in keeping business and personal assets separate.  If an LLC commingles its funds with those of its owner, or if the LLC pays the personal expenses of an owner, the limited liability protection may be destroyed and the LLC treated as a sole proprietorship. 

LLCs must be registered with the state in order to be recognized.  As with nearly every state registration, there is also a fee involved.  The LLC registration process in Utah is not overly burdensome; however, there are some potential pitfalls that an experienced attorney can help you avoid.  An attorney can also assist LLCs by preparing an operating agreement.  This is a vital document which provides the LLC with a “road map” for conducting its business activities. 

In addition to sole proprietorships and LLCs, there are other business structures for an individual to consider, including partnerships, limited liability partnerships, and corporations.  Individuals and businesses should seek out competent legal counsel to determine which structure is best.  Let the attorneys at the law firm of Gurr & Brande, PLLC use their skills and experience to help you organize and operate the right business entity for you. Call today (435-634-8868) or visit our website!

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[1] Most cities will require that a sole proprietor obtain a business license.

[2] Although, additional tax forms are required on your personal tax return. 

[3] One alternative to a sole proprietorship is an LLC.  LLCs are not recognized by the IRS.  They are called “disregarded entities.”  An LLC with one owner, or member, is taxed as a sole proprietorship unless the LLC elects to be taxed as a corporation.  This election is a topic which will be addressed in a future article.  

Creative funding for your next big idea...

As a Patent Attorney, I frequently have inventors and entrepreneurs asking if I can help them obtain funding for their idea. Because this is such a frequent topic, I thought I'd post about a relatively new method ( a few years old) of obtaining funding--it is known as "crowd funding."

Crowd funding has been a game changer for entrepreneurs and garage inventors. Gone are the days of needing venture capitalists (VCs) or heading to the bank for a loan. Those methods work great, but they carry quite the burden: what if you get the funding, have the product made, and then find out no one wants the product? Or, what if the interest rate on the loan is so great, that by the time you begin getting good revenue, you can't seem to get profitable? Or worse, what if the VCs decide to oust you as the CEO of your own company?

Worry no more! Sites like Kickstarter.com and Indiegogo.com have stepped up and taken entrepreneurs to the next level. I would encourage you to peruse these sites and see the kind of money that changes hands. It can be from a few thousand dollars, to a few million dollars! And best yet, it not only reduces the market risk, but it is completely interest free! Yep, interest free. Briefly, it works like this:

1. You come up with a good idea/product
2. You make a video and pitch your idea (usually with a rough prototype or illustrations)
3. You ask for a certain amount of money (e.g., $10k) to be raised in around 30 days. 
4. To reach the goal, you ask people (online) to donate money--no strings attached. They don't retain an interest in the company, nor do they get money or interest; they donate simply because they like the idea. It is typically $5, but lots of people giving you $5 goes a long way. Don't believe people will just donate money? Visit the sites and see for yourself!
5. You also ask people to pre-order your product. This takes the risk completely out of the picture. You'll know whether or not there is a market for your idea before you ever produce it.   
6. If you get the money you asked for within the time-frame (usually about 30 days), money changes hands and you begin making and shipping product. If you don't reach your goal, no credit cards are charged and no money changes hands. In other words, strategy is important here. You need to be able to cover the manufacturer's minimum order, but you also need to get funded. 

Lastly, it is important to note that patent protection should be sought before your idea is published online. This not only protects you in the U.S., but overseas as well. Otherwise, you not only potentially lose the ability to obtain any patents outside of the U.S., but you also run the risk of having someone take your idea and patent it before you do...leaving you with nothing. 

Give my office a call today to setup a free consultation to discuss your next big idea, how we can protect it, and then how we can get you funding. I've had clients successfully obtain funding using these methods, so why not join them? Call today! 435-634-8854

Robert A. Gurr

Patent Attorney
www.gurrbrande.com

An Overview of the Divorce Process

The impending termination of a marriage is one of the most emotional and challenging events that a person may go through.  Many people who are facing the ultimate demise of a marital relationship have feelings of sadness, frustration, anger, betrayal and fear.  A major contributing factor to fear is that people don’t know what to expect from the divorce procedure. 

Apart from terminating the marriage relationship, there are additional issues which may need to be addressed in a divorce.  These include:

·         Physical and legal custody of minor children

·         Parent-time with minor children

·         Child Support

·         Division of assets accumulated during the marriage

·         Division of debts accumulated during the marriage

·         Spousal Support

·         Tax issues

Every divorce matter begins with the filing of a petition for divorce with the court.  In Utah, a party seeking a divorce (i.e. the petitioner) must file the petition in the county where either spouse has resided for the three months immediately prior to the filing.  The petition for divorce identifies the spouses, provides some background information on the marriage and family, and then makes a request as to how the issues listed above should be resolved.  The petitioner then causes the petition to be personally delivered to the opposing party, referred to as the respondent.   Upon receiving the petition, the respondent has 20 days (30 days if the petition was delivered to the respondent out-of-state) to file a response, called an answer, with the Court.  If the respondent fails to respond within the appropriate timeframe, the court can award the petitioner whatever relief was requested in the petition.

Once the divorce case has begun, the issues listed above can be addressed and resolved by the parties (i.e. the petitioner and the respondent) through a settlement or they can be decided by a judge through the process of a trial.  Regardless of whether the parties settle their case or the judge makes a decision, when the divorcing parties have minor children they must participate in a state-approved divorce education and orientation course.  This course must be completed before the divorce can be finalized.

One method for settling a divorce case is mediation.  In fact, Utah law requires that parties participate in one mediation session before the judge will make a final ruling on any disputed matters.  Mediation involves a meeting with neutral third party, oftentimes a former judge or an experienced attorney who has received extensive training, who helps the parties resolve the contested issues.  If the parties are able to resolve the case through mediation, a written settlement agreement and other paperwork are prepared and filed with the court to finalize the divorce process.   

If the parties are unable to resolve their case through mediation, then the divorce matter moves towards a trial where the judge will decide the issues based on evidence presented by the parties.  Prior to the trial, each party will request from and share with the other party information and documents in a process called “discovery.”  The discovery process can be quite extensive, as well as expensive.  The purpose of conducting discovery is for the parties to gather evidence and prepare their case for trial.  At the trial, each party will be permitted to present documents, question witnesses, and argue their case to the judge.  Upon hearing all of the evidence, the judge will decide the outcome of the case. 

As you can see, the process can become fairly burdensome and/or complicated.  A skilled attorney will navigate his or her clients around the pitfalls and mines that are all along the path of a divorce case.  Having an attorney allows parties to a divorce case to be educated on the process, which will help to ease their fears and concerns. 

Jared G. Brande is a founding member of the law firm of Gurr & Brande, PLLC in St. George, Utah.  Mr. Brande has been practicing family law in St. George since 2007.