Patents Don’t Create Value. Businesses Do.

Josh W: Morning. Good morning. Welcome to The Deal Podcast. Why don't you kind of kick us off here with telling us a little bit about who you are and why did you say yes to this? 

Ted A: Okay. Alright, sure thing. Well, my name is Ted Anthony. I'm a patent attorney, registered patent attorney. I've been practicing in Lafayette here since I guess the early nineties.

I've known Jude for a while, known him to be a, a great guy, great lawyer, great deal maker, and uh, when he asked, I was happy to, uh. Come on board and try to hopefully, um, you know, spread, spread a little news regarding, uh, the patent world, intellectual property and maybe help some of your listeners with some of these issues that I'm sure come up, you know, fairly frequently and a lot of the deals.

Jude D: Yeah, no, no offense, you know, to other patent lawyers out there. I don't, I don't mean any, but most patent lawyers will put you to sleep when they start talking, and so I, I know I invited Ted on because he's not one of those, he's always made. You know, a, a thick skull guy [00:01:00] like me enjoy patent law and trademark law and all that.

So, well, really happy to have you on, Ted. Thank 

Ted A: you. That's very kind of you. I try, try to keep you awake. Yeah. 

Josh W: Well, so if you're listening while going for a jog or on a treadmill or something like that, you might hear three different voices. You know, we've got ju and I, uh, ju to me sitting here talking with Mr.

Ted. So you're, you're gonna hear three voices and we've got Chris on the, the turntable in the background, making sure everything works well. And we're just grateful that you're here. Ted. Awesome. Um, how does, how does the world of m and a and patents, like, how does that even work? What, what, what should we pay attention to there?

Ted A: Well, I think the most obvious thing is that, um, in many ways intellectual property can be a, as an asset or assets, and particularly patents. And, uh, what I've seen in, in my experience, I'm sure Jude has as well, very much, is that, uh, patents are frequently an asset that is part of the transaction. So.

Perhaps you're acquiring a, an entity or a company, while that [00:02:00] company may have a portfolio of patents or you may be doing some form of, of, of, uh, even if it's not an outright purchase, but some form of business transaction with an entity or an individual. And, and that entity or individual may have certain IP rights, patents, whatnot.

And so, um, you know, a lot of times licensing comes into play, uh, which is, which is a. A variation of the, of the concept. So, I mean, I think that the, the broad answer to your question is that, um, many deals involve these elements of intellectual property and uh, and I think it's important to know just like you would with any other asset, you know, when you do your due diligence and you learn about 'em and you learn what the.

Issues are, um, you know, it could be very important to the overall transaction. And I think IP is the same way. Patents in particular, but other forms of ip, but patents in particular. Yeah. 

Josh W: So we might be in a scenario, let, let's just say we're all working on a, on a case together, right? And we're, [00:03:00] we're doing a valuation on a business.

The, the, the guy or gal has been building this for a long time, multi-generational, and they're ready to do a valuation on the business as a whole. And, uh, we're gonna take a look at the patents and see what's valuable and then maybe where there might not be value, kind of walk us through what that would look like.

Sure. 

Ted A: Well, in terms of the, the valuation issue, you know, there are market issues that come into play and there are, uh, valuation experts who, uh, are probably more, you know, uh, more qualified than myself to determine the, the value of the asset. Mm-hmm. But certainly from a due diligence perspective in terms of making sure that, um, you know, the acquiring party is really getting something that they.

Has, has value or is is what they think they're getting. You know, there's a due diligence piece to that. And so that can take a lot of different, you know, forms or address a number of different issues. [00:04:00] Um, I mean, one of the key issues is the term of a patent. Patents don't, you know, they don't last indefinitely.

They have a term. And so, you know, I've seen situations where. Um, parties are acquiring patent rights and you research the patent and you realize, well, this is either expired or it's soon to expire, and of course you're gonna pay presumably or put less, uh, value on something that may have six months left versus six years or 16 years.

So, um, the term of the patent is very important. And then, um, in addition to that. Uh, what a lot of people I think don't realize is that in order to maintain a patent enforcement effect, you have to pay maintenance fees at three times during the life of the patent or during the term of the patent. And so those maintenance fees, I think, need to be researched to make sure that, you know, the acquiring party is actually buying a live patent and that the owner has in fact [00:05:00] stayed current on those maintenance fees.

So, so the term. Is, is a big one, certainly. Mm-hmm. Uh, to make sure that you're buying a live, you know, intellectual property. Right. Uh, legal right. Um, the other element, or one of the other elements is, um, the scope of the patent rights. Um, and what I mean by that is not all patents, you know, they're not all the same size.

They, some patents can be very broad and cover a, a very broad footprint. Uh, of subject matter and others can be very narrow. And again, when you're the buyer, uh, you typically want the broadest possible patent that you can get. Uh, um, but in the, you know, in the reality is that when you are seeking the patent rights from the government, um, the government acts as a gatekeeper in a lot of ways.

The US Patent and Trademark Office basically has a say in the scope of the patent. So. They're not all as [00:06:00] broad as you hope them, you know, would be when you file them. So where I'm going with that is that from a, an acquiring party, I think it's really helpful to really understand the legally protectable scope of the patent, just as a very, I guess, dumb analogy here, or, or or example.

Um, you know, patents often have. A number of drawings and figures, and I've seen clients, customers, or um, uh, you know, potentially acquiring parties, um, look at the figures and anticipate that that reflects the scope of the patent. So in other words, you look at the patent and you say, oh, this is a patent on a car, you know, an automobile.

Well, I've got an automobile patented. When in fact when you, yes, it shows a car. But when you really get into the. The substantive scope of the patent, if you know how to read them, it may only address, you know, the interval system on the windshield wipers or something very [00:07:00] narrow, which can still be important, but it's not what the acquiring party anticipated or thought they were, you know, getting with the patent.

So it's really important to identify the scope of the patent. You kinda have to know how to read them, uh, to do that. Yeah. 

Jude D: Well, you know, from the, the deal perspective, you know, both on the sell side and the buy side, um, it's the same questions. You know, whether you're a seller trying to convince somebody to buy your technology or you're a buyer, you know, trying to evaluate a company.

It's, you know, three things. Can the technology be covered? Did we cover it properly? And for how long? I mean, that's, that's the three questions everybody's asking, but I, I think. So many business owners that we talk to look at their patented technology backwards. They think they have a valuable company because they have a patent.

And it's like, well, that's, that's not where the value comes from. The value comes from an economically viable technology that you created, [00:08:00] and the patent is there to protect that economically viable technology. So if you got, if you developed something that nobody wants and you patented that technology.

Still, nobody's gonna want it just because you have a patent, but people really get it backwards. 'cause I mean, you, you can go down a rabbit hole in business thinking that you've built the next better mouse trap and then you, you can spend a good bit of money patenting it and protecting it and whatever else.

And it's really eye-opening for people whenever they realize no, like, just because we invested a lot in the r and d and then we invested a lot in protecting the ip, that doesn't make it valuable in itself. Um, and so that's something we've, you know, really had a lot of su success working with Ted on in the past is like, is this, is this even worth patenting?

Is this something that you want to protect? And, and I think a lot of IP lawyers don't ask those questions. They don't help their client to think through that, whether it's, you know, economically worth it. 

Ted A: I honestly, I couldn't have said it better myself that I think that is exactly right. I think [00:09:00]sometimes, you know, clients and, uh, and deal participants get it backwards because, um, what he said is exactly right.

The, and I think to get nerdy on you a little bit, part of the reason is that when you really examine what the patent is, what the patent rights cover, it's not the right to do something. It's the right to exclude others or prevent others from doing something. It's a legal right to basically monopolize have a legal monopoly over certain technology.

And so what that means is that you can start a business, you can do whatever the tech practice, whatever the technology is, and make a fortune doing it. Uh, and you don't need a patent to do that. The reason for getting the patent or having patent rights is because you want to potentially use those patent rights to enforce against others.

To stop them from doing whatever it is that's being covered. And so I think an offshoot of that is, as Jude indicated, you can frequently get a patent on something that has very little, if any [00:10:00]commercial, you know, value or, or benefit. Uh, and consequently, or, or conversely, you could potentially have a, an extremely valuable business that for whatever reason you can't get a patent on.

Uh, but it's still a, a, a great business and a great money maker. 

Jude D: I can't tell you how often we have people come in, they want us to value their business, and they're losing money, or they're at break even they say, but we've been at it for five years and we spent $200,000 on all these patents, and so I, I know there's value there.

It's like. Uh, if you've been at it for five years and it hasn't sold yet, I don't know if there's a lot of value there. Yeah. I hate to break that to people. It, it's a really tough thing. It is. Uh, but that's why it's so valuable to have a, a guy like you on the front end helping 'em to understand, is this a, a technology worth patenting?

Is this a, a journey you want to go down? 

Ted A: Sure. And I think it's just being, you know, have, having done this for a while and you look back, um, it's pretty easy, relatively [00:11:00] speaking to. You know, write a check to a patent lawyer or many checks or whatever and let them go about doing what they're doing. And then you sit back and it's, it's not really, the hard part is, I think the hard part is building the business and getting customers and growing, you know, utilizing the technology in a commercially successful way.

And then the patent rights are ancillary to that. That, again, as we've discussed earlier, is that helps you, um. Sort of maximize the value, but the, but inherent rights within the patent is kind of, uh, I think secondary to the, to the overall substance of the, of the, of the business and the technology. 

Jude D: So if, if you're going down that journey with a client and you're, you're trying to help them understand, do we patent this technology?

What are, what are the steps you're walking through with them to help them understand, you know, what's the cost gonna be? Is it worth all that effort? You know, that sort of thing. Sure. Help us to understand that. 

Ted A: Well, I honestly, I [00:12:00] think it all starts with explaining to them what I just did and what the patent rights really get you.

Because I often see misconception, uh, clients with misconceptions that I need a patent in order to do this, whatever this, this is, whatever the technology is. And again, I have to explain that. Well, no, you really don't. You don't need a patent in order to. Commercialize technology and, and build a successful business.

You might want a patent and it may be a good smart idea to get a patent and we can talk about that. But, um, but sort of the fundamental issue of is this going to be a moneymaking idea? That's really a separate issue and. Honestly, Jude, in a lot of ways, I try and stay agnostic about that because I don't want to influence them either way, because honestly, I'm not in a position to, I don't think any patent lawyer usually is in a position to really evaluate what the marketplace is, how the marketplace is going to, um, you know, how it will accept or not accept a particular [00:13:00] technology that's, that's sort of beyond the piece that we help with or that I can help with.

So I kind of focus on the. The sort of the, the, the straight issue of patentability and hopefully explain that fully to the client and let them know what some of these limitations are. Also, what some of the costs are likely going to be. The timing to be. Oftentimes people overlook the timing issue, but um, patents are not, you know, instant gratification.

Usually, you know, you file. And, uh, you know, I've had some that, uh, you know, certainly there are some things you can do to expedite the process, but just sort of the standard timing and if you kind of get in a, in, you know, maybe for whatever reason have a little bit of bad luck with the process, uh, it can drag out for years and, uh, you know, sometimes two, three years is not uncommon.

A lot of that time, you know, we are, we file the application, it's in the hopper at the patent office, and they're working [00:14:00] on it, and we're just sort of on standby, waiting to get something from the examiner. And I want to clarify during that time, it's not that I'm delaying or the client's delaying, we, we've prepared and filed everything and it's just, you're in a, you're, you're sort of in the queue at the patent office and waiting for a response that you can then deal with.

But it's not, it usually doesn't happen overnight. It takes a while. Now there are ways. If you want to pay more, you know, there's some, there's a, a program where you can expedite the handling and if you're beyond 65 as an inventor, you could potentially, uh, expedite it if you file the necessary petition there as an inventor.

So there are some things you can do under certain circumstances, but the general run of the mill application, um, you know, it's, it's a, it's a process. It's not a, doesn't happen overnight. 

Josh W: I wanna dig into this. If you're 65 years old listening in on this, there's a, there's an option for you. I've never heard of this.

Mm-hmm. That you could have an expedited review of your patent. Right. And maybe it moves through the system. I mean, it [00:15:00] seems obvious to me, but why would they, why would they incorporate that and like, what's the, what's maybe the case study, or, or why? 

Ted A: Uh, well, I think, I mean, bluntly, it's that I think when you just look at the statistics, they're figuring that the.

You know, anticipated future lifespan of someone over 65. They, they don't want 'em waiting on the patent office. They, they, uh, you know, like, I guess when you, you, you, you're fairly well seasoned, you know, every minute counts, right? So they're trying to make it as efficient as possible for people who have, who have crossed that threshold, 

Jude D: I'd imagine, you know, that's the age that most business owners are thinking about exiting as well.

And so if you're going to patent your technology before you sell your business. You can't do that on the eve of selling and, and business owners tend to wait to ask all the big questions, what do I need to do to prepare until the last second? Sure. And so I'd imagine you have a lot of people trying to ram one through, right?

Yeah. At the end of the process. And on 

Ted A: that point, Jude, I'll [00:16:00] also note, 'cause I think this is an important element of patent law that I think all your listeners need to understand and be aware of is. Any inventor, whether regardless of your age, must file a patent application within one year of the first public use or sale or offering for sale of the technology.

And so, you know, I've had people unfortunately come to see me who have said, you know, I've been using this technology for five years and it's great. Everybody loves it. And I'm said, well, unfortunately you kinda miss the boat. It's too late to file. At least on what you've been doing now, you might potentially be able to improve it and we may be able to seek patent protection on the improvement, but on the base thing that you've been out there actually using and commercializing for that, you know, more than a year, it's unfortunately gonna be too late.

So, 

Josh W: so it seems to me to make sense where you start, you build something and it starts gaining traction. That's the time to start having a conversation with a patent attorney to say, this is getting some [00:17:00] traction. There's value in the marketplace. As Jude, you know, brought up. You know, maybe let's take a look at that, kinda get that patent pending under review early on.

Is that a good thought? 

Ted A: I would actually start maybe a little sooner than that. And the reason is because back when I started doing this in the, actually in the early nineties, um, you really only had one option if you wanted to pursue a patent. And that was to go sort of the full deal and write up the full patent with the formal drawings, the formatting, the fairly significant filing fee.

And so it was a, it was a commitment. Um, we now have and have had for a number of years a, uh, initial step known as a provisional patent application. And the, there are no a number of advantages to a provisional patent application, but some of the key advantages are, uh, that's very loose formatting requirements.

So you can often use photographs of prototypes if you have that, you can use, you know, SolidWorks or CAD drawings, you can [00:18:00] use act. I've actually been. In meetings before with, uh, you know, a number of engineers and they literally scribble something out, some drawings on a pad and say, Hey, Ted, go file this.

And so run down the hall and, and file it. So you know that that's an extreme kind of example, but. My point is that the formatting requirements that frequently exist with the full blown what's called a non-provisional patent application, those, those are, those are relaxed for a provisional application.

So to your example, my recommendation would be for most cases, file that provisional early because, uh, a, you're get patent pending status. So then when you're. Talking to people, showing the technology, et cetera, you can legally represent its patent pending. And then, you know, your costs generally for a provisional are gonna be much more modest than going the full, full blown, non-provisional application.

And then I'd say the, probably the biggest reason out of all of this is that. The patent [00:19:00] system used to be based on the first to invent. So if you had a sort of a competition between two applications that were pending in the patent office, the winner under the old system was the, was the inventor who invented it first.

But under the current system, it is a first to file system, which means there's a premium on getting your application in the door and on file sort of as soon as you can. And the provisional is a very. Good, quick, effective way to do that. 

Jude D: How, how long can you have a provisional application pending to, 

Ted A: it remains enforced for one year, and then you have to file the non-provisional within one year from the filing date of your provisional application.

So I, I use the term non-provisional. That's what most people think of as the full blown, you know, expensive, significant patent filing. Uh, so the point Jude, which is a great one, is it allows frequently. The inventor, the, the, the business owner [00:20:00] to defer that significant investment until down the road, at least a year.

Or, you know, you gotta get started before the, you know, the 365th day. So let's say, you know, you at least get 10 months maybe of seeing what kind of traction you get before you have to take that next big step of filing a non-provisional application. 

Jude D: That's great. You get to know, is this economically viable?

Do people want it? Sure. Then you can make that call. 

Ted A: It's a great tool. The provisional application is a great tool because it lets you dip your toe, you know, into the water without diving all the way in. And, uh, you know, every once in a while I have clients who say, look, this is a winner. I don't, you know, I'm gonna, I'm not gonna wait a year.

I'm gonna just go ahead and, and, and file it. But even then, it takes a while to put together the, the non-provisional application just because of the. The, the, the parts that go into it and the, the research and the, you know, this, the whole commitment, it takes a while. So even in that case, I typically [00:21:00]recommend we file the provisional 'cause we can do that quickly.

We can establish a filing date and you don't have to wait a year if you don't want to, but, um, you at least have something in the patent office and then you can file it at some point thereafter, within a year. 

Josh W: So let's run into the, uh, scenario. Let's role play here. Okay. Let's say Jude is private equity, okay?

And non venture capital. How do we view patents differently? Right? So maybe from our, our perspectives, like how would, how could we view patents in their value? 

Ted A: Well, again, I think there's a, there's a marketplace valuation, and that's usually not the patent lawyer's place. I mean, some, some hold themselves out to do that, but usually that's gonna be a CPA or a, uh, certified valuation specialist who's gonna be able to look at the, the value of the patent.

In the marketplace? 

Josh W: Well, maybe how would we approach maybe patents like a vc, early stage companies, you know, versus a, a pe looking to [00:22:00] acquire or sell? 

Ted A: Yeah. Like 

Josh W: how would we look at them differently? 

Ted A: Yeah. Well, I I'm not sure you really would look at them, uh, all that differently. I mean, I guess it, it depends exactly the perspective that you're, you know, each, each particular, uh, participant has their own unique perspective on it, certainly.

But I think. I kind of think it would be, you would view them both sort of the same, both sides would view them sort of the same way, I think. And I think that would be, uh, getting back to what does it really cover? What is the scope of the patent and what does that really mean to the business? I mean, I think that's really the key issue.

And then there were ancillary issues like, well, how long does this patent right last? Mm-hmm. And has it been maintained? There's another really important element to patent, uh, evaluation that I didn't really talk about. But, um, the frequently [00:23:00] when it's when you are filing a patent application, it is a, a, um, an an interaction between one individual at the patent office, an examiner and the inventor or the inventor's representative.

Uh, but that examiner, I mean. Happened has been wrong. They've overlooked sometimes important prior art or things that are out there, or, um, they've potentially, you know, there's a variety of things that can happen that could, um, render a patent as being invalid. And that's an important thing for, I'm sure, you know, investors or, or acquiring parties or whatnot, is to get a sense of, Hey, how strong is this?

Not just what does it cover, but how strong is it? Are there any. You know, glaring invalidity issues. Now, patents, once they're granted, they are entitled to a legal presumption of validity. So they are presumed to be valid. Um, but that, that, that presumption can be [00:24:00] challenged. And I've seen many times where patents, uh, have been challenged and have been rendered invalid.

And of course, if you're the buyer, that's not, that's something you want to know before you buy, if to the extent you can evaluate it. 

Jude D: Oh yeah. I remember a case that Ted helped me with many years ago. Uh, client sold business and, uh, immediately afterwards had a, a lawsuit filed to invalidate the patent.

And boy, that's, that's frustrating when you, you think you've just secured your retirement and all of a sudden you have an indemnity claim for something like that. Sure, sure. Fortunately, we were able to settle that one out and 

Ted A: yeah, it 

Jude D: ended up okay, but 

Ted A: Right. 

Jude D: Boy, that, that was a scary moment. 

Ted A: It is. And there's, you know, there's.

So many of those issues that are sort of under the surface that, um, you know, can, can rise up and surprise business owners and, and, uh, buyers and uh, you know, to the extent you can get any type of, uh, advance warning about that, that's, [00:25:00] that's often wise to do, certainly. And then build that in your deals from an indemnity perspective, you know, from the seller or whatnot.

There's a number of ways you can try to protect yourself from that. 

Jude D: So, back to your question, Josh, I mean, I, I think from an economic perspective, a lot of time your early stage guys, your inventors, your VC guys who are backing them, um, are really looking, you know, can I protect my investment and make sure that if this thing grows, we're able to protect those dollars.

Uh, somebody like me, whenever we're buying a company that already has a patent and a technology that's, that's viable. I'm, I'm really focused on can we protect that technology and for how long? Because I know this makes dollars and if it makes dollars, I wanna know how long I can make those dollars because that informs how much I can pay for the business.

Um, you know, businesses sell based on a multiple of earnings. So if, if a company is being sold for six times earnings, I need to know that that patent is gonna get me at least [00:26:00] six years of that value. Uh, you know, going into the future to, to just make my money back. And you never wanna just make your money back.

You wanna, you wanna have a nice return. Sure, 

Josh W: sure. So, yeah, so I guess if there's five years left on the patent and you're buying that six years, you know, earnings. Then you gotta figure out a way to, to make your money back quicker. 

Jude D: Yeah. Make your money back quicker. Or you need to, to extend the technology and find a different way to make money from it.

Sure. Because it won't be viable otherwise. 

Ted A: Right. Um, you know, the term of a patent current term is 20 years from the filing date. Mm-hmm. So it's significant. I mean, it's not like three years or something. And so, uh, over that term, frequently what I see is, uh, you know, technology science. It evolves, improves people practice version 1.0, and then they improve it and figure out how to do version 2.0 and 3.0.

And so frequently what I see is, um, is a, is a, an evolution of, of a string of [00:27:00] patent rights where it starts with the sort of the foundational patent, but then there are patents on improvements and that's the way to extend your. The term of the patent is sort of written in stone. It's 20 years from the filing date and there's really not much of anything you can do about that, but you can extend it beyond that time by patenting improvements or making, uh, you know, tweaks and improvements to the technology.

Then protect those. 

Jude D: I've had many a patent lawyer explain laddered patent portfolios to me. Sure, sure. All the different improvements you keep adding on an improvement and it, uh, it gets a little bit further down the line. Um, I, I think something we see a lot from business owners is, you know, they'll file a patent on their technology and they'll ride that patent for 15, 16, 17 years before they're ready to sell their business.

And they haven't done any extensions or any, uh, you know, new technologies to add on. And that really hurts 'em in the sale process because a, a PE looking at their business says, well, somebody can knock this off in a couple of years. Sure. Uh, so that's a really [00:28:00] valuable tool to be able to add additional layers to the patent and then, and then keep that technology alive.

Ted A: It's true. You know, in fairness though, a lot of times the business owner is fighting the battles out there, you know, trying to, trying to do all the things that a business owner does in terms of, you know, servicing their customers and building the business and whatnot. And so they probably look at the, their initial patent frequently is their baby, and that's what everything's built around.

They're not really thinking about, well, what about this improvement and what about when I go to sell and what, and that's smart to do so. You can kind of understand how frequently that doesn't happen. But I think it's a good tip to definitely be looking at, okay, how can I, how can I extend this, uh, protection beyond the basic term?

And the best way really to do that is typically through these improvements that you can patent. 

Jude D: We've had so many deal experts on this podcast, and it's funny how every single time it comes back to the same [00:29:00] issue, if business owners started a little bit earlier in the sale journey, they'd be able to plan things out.

Make all the right moves. Uh, unfortunately people tend to wait a little too long. 

Ted A: Yeah. And, and they're fighting the battles. They're fighting, you know, and it's probably getting a second or a third or fourth patent is something they feel like, well, I'll do that later. I'm too busy with my day-to-day stuff.

But it is important to focus on. And it is, and it really, I think that starting early is great advice. Certainly. Yeah. 

Josh W: I gotta pause the, the this for a second. I, what's your favorite movie, book, or, or song? Like what, what's something that really speaks to you and why? 

Ted A: Hmm. Uh, that's, that's a really interesting question.

You know, um, right now I would say, uh, my favorite song is, um. A is a song actually by Jason Isabel, [00:30:00] and it's called Miles And, uh, it's, um, I just sort of, uh, I've always, I've been a musician, uh, really just played the guitar since I was a kid, and as you can tell, I'm not a kid anymore. So I've been doing it a long time.

And, uh. So, uh, anyway, so I've always enjoyed rock and roll and, you know, rock music and played it and everything. And, uh, just sort of really gotten into, um, this, this particular artist and have been listening to his, pretty much this whole catalog. But this is a song that's about, it's about. A lot of things and growing up and, and you know, your kids growing up and the relationship you have with them, it's very, uh, very poignant.

So, yeah, so that's probably it right now for me. And I've seen Jason Isabel, uh, probably way too many times in the last few years in, in concert, but, uh, but uh, yeah, that's, that's what I'm on right now [00:31:00]

Josh W: for. How does that, that song, or what that song does, how does that impact how you show up in life or your business?

Ted A: Well, I would say what it does in that particular song, and really a lot of, a lot of really good music, at least that speaks to me, is live in the moment and, uh, be aware of, like, don't think about, oh, I'll do this later, or I'll, you know, I'll call that person I care about later. I got time for that, or I'll do this with my kids later.

I got time to do that. It's more about, I think. Is, um, you know, none of tomorrow's not guaranteed for any of us. And so do what you wanna do now and, and be, you know, be aware of that. And so I think, honestly for me, a lot of these songs, the ones that I particularly gravitate to, are reminders of that. 'cause I think we all get caught up in our day to day grind and all the little headaches we have and we lose track of [00:32:00] that.

And, uh, it's helpful to me. Plus it's good music too. I mean, that's obviously the. The other part of it. But, uh, but it's helpful to, you know, lyrically to have that reminder of, Hey, this is, you know, you're not here forever. Make it count. 

Josh W: Yeah. Well, what's interesting here is, uh, Jude brought a guitar in for you, and we want you to, 

Ted A: I just kidding you, gonna lose a lot of listeners.

I'll just say that that's gonna be a sharp drop off on your, uh, on the listening stats. 

Josh W: All right. Back to deals. 

Ted A: Okay. 

Josh W: Um, man, thank you for sharing that, by the way. Sure. Um. I was watching Shark Tank the other day, and, uh, Mr. Wonderful talks about licensing. He's like, all right, I'll do this and I want royalties and this, and, but he mentions licensing, you know, for, for someone who might have a portfolio of patents, right?

And maybe there's a patent or two that they're not really using, but there's still value in the marketplace. Maybe share what licensing is and maybe how it could add value to the company or [00:33:00] maybe the future. 

Ted A: Sure. Just as an aside, when you mentioned Shark Tank, one of the, the patent lawyer, uh, irritations, I guess, or things that that bother me about it is re people frequently go on there and say it's patented.

And it's like, we filed it last year whenever, and I'm like, there's no way. There's no way you're patented. I don't know anything about it. But, uh, you're patent pending probably. So you filed a provisional patent application, you know, presumably. Um, so anyway, that, that tends to show up a lot on there. And, uh.

Anyway, to your point, to your question, licensing is essentially the granting of a right by the patent owner to someone else to practice whatever it is they want to practice or can practice under the invention, uh, under the patent rather. Um, and so, um, really what you're doing with a license is granting that right to others to go out into the marketplace and, uh, exploit or commercialize the, [00:34:00] the, the.

Technology without fear of having the patent rights enforced against them. Uh, and in return for that, you know, you usually get some type of compensation in the form of a royalty or, um, you know, sometimes an upfront bonus can be paid or both. Um, but you know, the classic example, uh, is a, let's say a scenario where maybe it's a university who you know is not.

Inclined to go out and actually start a business and commercialize technology, but they, for whatever reason in their research, uh, endeavors have a patent portfolio that, uh, you know, covers, um, technology that would really be meaningful in the marketplace. While some business owner may say, Hey, look, license me under this patent.

I'll go out and do the work and whatever, and I'll pay royalty. [00:35:00] That's, you see that a lot because a lot of times these, you know, universities, they have great research arms, they have great, um, sort of scientific, um, development, but they're, they're not really gonna go out into the world and, and start a business.

Mm-hmm. Sometimes he do, but it's. Usually they're in partnership, if you will. I use, I don't use that term, legal, not a legal partnership, but sort of loosely a partnership with a, with a business owner. And so they license them. Um, and, and the other area you see it is when maybe a a, a business, even not a university or not a learning institution, but let's say a business that, um.

For whatever reason, it, it's, it's something that they might have covered, but it's not in their core area of operation. So let's say that, you know, a business is, is out there and they only want to do X and they're not interested in branching off into Y, but there's someone else in the marketplace who says, oh, I want to, I [00:36:00] can, I can really do well with why license me and.

And then you get into the question of is it gonna be an exclusive license, is it gonna be non-exclusive? Meaning can you grant multiple licenses to a lot of different parties? Or is it going to be an exclusive license where it's only gonna be one party that's granted that license? And usually the, the compensation profile changes, whether it's exclusive or non-exclusive.

Jude D: We, we see that in the m and a world as well. Um, you know. Through, through the sale process. I mean, obviously you have the question of are we selling this patent? Are we licensing this patent to the buyer of the business? Um, you know, is there gonna be an exclusive use? And I, I find whenever it's a really, uh, you know, game changing technology, you know, we, we do a lot of oil field deals around here, and if somebody's got, you know, a game changing technology.

You know, you could buy that product from the existing owner of the business. So there's really no reason you have to buy the business to incorporate it. But a lot of times what [00:37:00] they want is to keep other people from having that technology. 

Ted A: Sure. 

Jude D: And so they're, they're buying the business so they can have that exclusivity.

Right. And that's where that patent is really important. Sure. Those deals are the ones where, where people are really focusing on a guy like Ted. To tell 'em whether it's enforceable. 

Ted A: Sure. The, the practical reality too of this marketplace, you mentioned oil and gas and that is certainly a big part of my client base and my background.

I was a petroleum engineer, so I mean, I'm, I come from that sort of world working for oil companies and the technology that I'm familiar with. Is in this area, you know, it all sort of meshes where it's really sort of oil and gas based is a big, is a big focus. Um, well what we see a lot of times are the little mom and pop or smaller operators that build up this great business, but their goal ultimately is to get acquired by, hired some major service company.

And I can name, you know, I won't name any names, but everybody knows probably who they are. Just these huge conglomerates that buy up the [00:38:00] smaller. Uh, businesses, well, even though mom and Pop may not really ever plan to enforce that patent or do anything with that patent, uh. When Big Brother comes in and acquires them, and this gets to sort of your earlier question on, on, you know, how, how the rights are viewed.

Uh, those big companies can put a real premium on a patent portfolio, and so there really is a way to unlock value for the smaller operator, even if it's not really in the fairway of what they're mostly interested in the down the road when you sell the business, particularly to. Certain buyers, uh, sophisticated buyers that could really have a meaningful impact on the, on the, the, uh, you know, the, the, the, the compensation or the, the package for the deal.

Josh W: Jude, as we wrap up, do you have a final question for him before I hit him with my final question? 

Jude D: Well. We haven't even touched [00:39:00] trademarks yet, so 

Ted A: yeah, I'll be back for that. 

Jude D: I would, I would love to have just the, give me your elevator pitch on, uh, on what people need to know about trademarks and, okay, great point.

Ted A: Okay. My elevator pitch is everything we talked about, patents kind of forget it because it's totally different for trademarks. It really is, and I don't think, I think a lot of people don't realize that. And what I mean by that is that trademark, excuse me, with patents. When you really boil it down, the right that you get is a function of your communication with the government.

In other words, you submit an application, the government says yay or nay, and then they, if, if it's successful, award you a patent. Right? That is sort of the cornerstone of whatever rights you have to enforce with it. And in, like I said earlier, if you use it for too long, you lose the right to even pursue that.

So if you're out there in the marketplace for more than a year. It's too late. Trademarks work very differently in that the substantive [00:40:00] trademark rights do not arise by virtue of getting a, a, a, a piece of paper from the government. They arise through use of the mark in commerce. So the earlier and more extensively, you use the mark trademark, whether it be a logo or word mark or whatever.

Um, you are building rights even before you even think about going to the government. You are, you are building substantive trademark rights through use of the mark in commerce. Now, you can register. There are both, it's a parallel system. Typically. You have a state level. Louisiana, we have one. I think pretty much every state has one, but there's Secretary of State and then you have a federal, uh, registration level.

But I think the key thing is that. To draw that distinction, Jude, is that if you don't go through the process with a patent and do it timely and sort of, uh, you know, have it strategically figured out what you're going to do, it can be too late. And that's really the what gives you all of your [00:41:00] rights. By contrast with the trademark, you know, I've had many, many clients who have been using a mark for a number of years and they're like, oh, I want to go ahead and register now.

And that's fine. You can, you can register later, but you've already got some level of what are known as common law rights by virtue of your prior use of the mark. 

Jude D: So if somebody is a business owner sitting at home and they're thinking, oh, I, I've wondered whether I should register a trademark, should I call Ted Anthony and, and figure out how to file this?

You know, what, what should they be thinking? You know, what, what's the thought process? 

Ted A: Um, I think the registration is important. So yes, they can call me. Yes, they do a lot of trademark, uh, work. Uh, I think registration can be important, but I think that for purposes of my earlier answer, it's to point out the distinction with the patent system.

It is not to be, uh, uh, intended to be, Hey, don't register. It's not important. 'cause it can be. So for that [00:42:00] potential, you know, client that's out there, it's, um, it, it. By registration, you can solidify a number of your rights. You can, uh, get a number of important procedural benefits. So there are often, um, you know, a lot of good reasons to, to, um, register a trademark, but I think the number one answer is it's not too late.

And so if you've been using it for a while, like I said, with a patent, if you have been commercially, if you've been actually commercially using or publicly using an invention. The time has run too long. It's kinda like you're out of options. But with a trademark, I mean, you can come in and we can, we can work on registration long after it's been in use.

Jude D: So we know patents. Big, long application process, very expensive. Uh, trademarks. Is that a lighter process? 

Ted A: It's, that's a great way to to say it. Yes. It's a lighter process and like I said, you have actually two parallel systems in the state. It's extremely quick. It's literally like a couple days. [00:43:00] You prepare it, you file it, they check against the database and say, okay, there's no one else has this.

And they give it to you or, or, or reject it depending upon what's in the, what's already, you know, been registered. The federal level is a, is an examination process and I think it's, I would call it like patent examination light. It's sort of like that, but it's much more scaled back and quicker. 

Jude D: Fantastic.

That's a great overview. I'd love to have you back on to talk more about trademarks in the future. Sure. All the ways we can put IP and commerce, I'm sure. Uh, our listeners are always thinking about that. 

Josh W: Yeah, definitely. Uh, a part two is, uh, how, how, how this all pieces together for merger and acquisition.

Um, I think would be super helpful. Sure. We're gonna put your contact information in the show notes. 

Ted A: Okay. 

Josh W: Your personal cell phone too. No, I'm just kidding. Yeah. We'll put your contact information so if people are listening in, they go, man, I would really like some, um, some feedback or maybe some advice they could, um, [00:44:00] reach out and connect with you.

Uh, I guess final question is, you know, it could be, you know, what you're grateful for, where do you find your joy or maybe some piece of wisdom that you'd like to share with the audience. And then we will wrap it up after that. Okay. 

Ted A: Sure. Well, I think it's, uh, a, you know, it's a cliche. Everybody says it. I often wonder if everybody means it, but I really do mean it is.

I think my biggest joy is just being a dad and, you know, being a husband, I think, uh, I've just been blessed with a, uh, a wonderful family life experience, both as a child, you know, I had great parents and then got great kids and great wife, and I'm just very. Thankful for all that, and I appreciate it really every, every day.

So that's probably the thing that's, uh, just, you know, when you, when you say that little prayer of being thankful for things, that's probably what I'm most thankful for. So, yeah. That's it. 

Josh W: Cool. Well, Ted, thanks for coming on. Uh, ladies and gentlemen, in the audience, fellow deal makers, as always, reach out to our guests, say, thanks [00:45:00] for being on the show.

And if you do us a favor, if you're listening in, uh, please share this with someone who you think might be, uh, in need of this kind of content. And, uh, you know, on the deal. Podcast website, you could always go up to the top. And if you have questions or ideas for future content, uh, please contact us. Let us know how we're doing, and then any, uh, suggestions or advice or potential guests, that'd be a good fit.

But, um, love you guys and we'll talk to you all on the next episode. Cheers. Thank you 

Ted A: very 

much.